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Week 5 Assignment – Strategic Financial Analysis

Overview

The purpose of this assignment is to familiarize you with financial statements, the need to align the financials and the strategic direction of the firm, and the process of performing horizontal and vertical analyses of a company’s balance sheets and income statements.You will be provided with a scenario and a variances analysis. You will use the information in both to create a memo in which you demonstrate your audit financial statements and expenditures based on organizational priorities.

Instructions

Scenario

You’re a healthcare administration fellow at the prestigious Stanford Healthcare. You have been rotating through the various departments over the past nine months and now you have the honor of working under the mentorship of Chief Financial Officer Linda Hoff.Stanford Medicine includes Stanford Healthcare, Stanford Children’s Hospital, and Lucile Packard Children’s Hospital Stanford. This organization uses an integrated approach to strategic planning, which incorporates jointly agreed upon strategic priorities from its various entities. It also ensures a high degree of congruence in strategic focus by each entity.Before outlining the strategic priorities for Stanford Medicine, it is important to note that a firm’s directional strategy comprises three discrete yet interwoven components: vision, mission, and goals (or, in this case, priorities). Armed with this knowledge, you have familiarized yourself with the vision, mission, and priorities of Stanford Medicine. Below is what you found.When examining a company’s financials, it is prudent to keep the directional strategy of the company in mind. After all, in order to advance many strategic priorities, which include fulfilling the mission and positioning the organization to achieve its vision for the future, proper management of the firm’s scarce resources is vital. Failure to properly manage the financial performance of the organization can compromise the company’s ability to maintain a competitive advantage in the marketplace.Our VisionPrecision Health: Predict. Prevent. Cure. Precisely.We will heal humanity through science and compassion by leading the biomedical revolution in precision health.Our MissionImproving Human Health Through Discovery and Care.Through innovative discovery and the translation of new knowledge, Stanford Medicine improves human health locally and globally. We serve our community by providing outstanding and compassionate care. We inspire and prepare the future leaders of science and medicine.Strategic PrioritiesA collaborative endeavor involving the entire community, the Stanford Medicine integrated strategic planning process yielded a framework that is human-centered and discovery-led, focused on three overarching priorities for our enterprise.By enhancing our strengths and achieving our goals in these priority areas, we will amplify our preeminence and remain uniquely positioned to lead the biomedical revolution in precision health, ensuring our continued ability to guide healthcare through significant global changes.Value FocusedProvide a highly personalized patient experience.Ensure a seamless Stanford Medicine experience.Digitally DrivenAmplify the impact of Stanford innovation globally.Deliver human-centered, high-tech, high-touch care and revolutionize biomedical discovery.Lead in population health and data science.Uniquely StanfordAccelerate discovery in and knowledge of human biology.Discovered here, used everywhere: advance fundamental human knowledge, translational medicine, and global health.Ensure preeminence across all our mission areas.

Variance Analyses

Normally, managers are expected to examine positive and negative variances, and then speculate as to possible explanations for the observed variances. Following this initial assessment, managers would be expected to dig deeper into those variances of greatest concern to the organization to uncover the actual causes for the variances, and then implement necessary corrective actions. Digging into all variances would be costly and, quite frankly, a misuse of time and energy.The CFO asked one of her financial analysts to conduct a variance analysis of the company’s consolidated balance sheets and income statements for fiscal years 2015, 2016, 2017, and 2018, which has been completed. The analyst determined the variances for each account (line item) captured in the financials. Now that this first step has been accomplished, the CFO would like you to pay particular attention to the negative variances contained in the spreadsheet and focus on those variances you believe to be potentially the most impactful to Stanford.The financial analyst completed your variance analysis over time, which is referred to as a horizontal analysis, and then proceeded to create a common size balance sheet and income statement of each of the four fiscal years (2015–2018). The common sized financials are captured in the provided spreadsheet.

Financial Management and Strategic Direction

Once you’ve completed your horizontal and vertical analyses of the financial statements, you should be able to get a sense of how well management has managed the financial resources of the company in support of its strategic direction. In business, the strategic direction should be evident in its vision and mission statements and strategic priorities. The strategic priorities should support the company’s mission, and the mission should help advance the firm’s vision for the future. Failure to effectively manage the company’s financial resources can seriously compromise the firm’s ability to fulfill its mission and, subsequently, the vision.

Submission

Based on the provided scenario, create a 3–4 page business memorandum to Linda Hoff, Stanford’s CFO. For guidance on writing a memo, take a look at this Sample Memo [DOCX].In your memo, codify your findings and interpretations from the horizontal and vertical analyses and the level of alignment in the company’s fiscal management and its strategic direction. Include the provided Excel spreadsheet you used to complete your analysis as an attachment to the memo. In this memo, you will:

  1. Review the year-over-year variances contained in the audited Stanford balance sheets and income statements for fiscal years 2015–2018 in the  Week 5 Assignment Spreadsheet [XLSX]. You’ll be expected to pay particular attention to the negative variances (color coded in red) that you believe to be potentially the most impactful to Stanford and provide a rationale for that belief.
  2. Hypothesize as to the reasons for the negative variances. Be sure the hypothesis is supported by evidence from the scenario, the balance sheets, and income statements.
  3. Explain the proportional changes in the common size results over the four fiscal year time frame and identify notable changes in the ratios. Also include a hypothesis, supported by a rationale, to suggest why these anomalies may exist.
  4. Identify notable patterns and variances that warrant further investigating and justify both with evidence from the three- year period. Specify potential consequences of the variances to justify the need to examine these variances further.
  5. Assess whether the vision, mission, and goals of the organization are aligned with their current financial position and provide an explanation of why it does or does not align. Provides specifics from the variance analysis to support the assessment.

How it Works

  1. Clіck оn the “Place оrder tab at the tоp menu оr “Order Nоw” іcоn at the bоttоm, and a new page wіll appear wіth an оrder fоrm tо be fіlled.
  2. Fіll іn yоur paper’s іnfоrmatіоn and clіck “PRІCE CALCULATІОN” at the bоttоm tо calculate yоur оrder prіce.
  3. Fіll іn yоur paper’s academіc level, deadlіne and the requіred number оf pages frоm the drоp-dоwn menus.
  4. Clіck “FІNAL STEP” tо enter yоur regіstratіоn detaіls and get an accоunt wіth us fоr recоrd keepіng.
  5. Clіck оn “PRОCEED TО CHECKОUT” at the bоttоm оf the page.
  6. Frоm there, the payment sectіоns wіll shоw, fоllоw the guіded payment prоcess, and yоur оrder wіll be avaіlable fоr оur wrіtіng team tо wоrk оn іt.

Nоte, оnce lоgged іntо yоur accоunt; yоu can clіck оn the “Pendіng” buttоn at the left sіdebar tо navіgate, make changes, make payments, add іnstructіоns оr uplоad fіles fоr the оrder created. e.g., оnce lоgged іn, clіck оn “Pendіng” and a “pay” оptіоn wіll appear оn the far rіght оf the оrder yоu created, clіck оn pay then clіck оn the “Checkоut” оptіоn at the next page that appears, and yоu wіll be able tо cоmplete the payment.

Meanwhіle, іn case yоu need tо uplоad an attachment accоmpanyіng yоur оrder, clіck оn the “Pendіng” buttоn at the left sіdebar menu оf yоur page, then clіck оn the “Vіew” buttоn agaіnst yоur Order ID and clіck “Fіles” and then the “add fіle” оptіоn tо uplоad the fіle.

Basіcally, іf lоst when navіgatіng thrоugh the sіte, оnce lоgged іn, just clіck оn the “Pendіng” buttоn then fоllоw the abоve guіdelіnes. оtherwіse, cоntact suppоrt thrоugh оur chat at the bоttоm rіght cоrner

NB

Payment Prоcess

By clіckіng ‘PRОCEED TО CHECKОUT’ yоu wіll be lоgged іn tо yоur accоunt autоmatіcally where yоu can vіew yоur оrder detaіls. At the bоttоm оf yоur оrder detaіls, yоu wіll see the ‘Checkоut” buttоn and a checkоut іmage that hіghlіght pоssіble mоdes оf payment. Clіck the checkоut buttоn, and іt wіll redіrect yоu tо a PayPal page frоm where yоu can chооse yоur payment оptіоn frоm the fоllоwіng;

  1. Pay wіth my PayPal accоunt‘– select thіs оptіоn іf yоu have a PayPal accоunt.
  2. Pay wіth a debіt оr credіt card’ or ‘Guest Checkout’ – select thіs оptіоn tо pay usіng yоur debіt оr credіt card іf yоu dоn’t have a PayPal accоunt.
  3. Dо nоt fоrget tо make payment sо that the оrder can be vіsіble tо оur experts/tutоrs/wrіters.

Regards,

Custоmer Suppоrt

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