Limitation of Ratio Analysis

Limitation of Ratio Analysis Limitation of Ratio Analysis Learning Objective Explain to the participants on the limitation of ratio analysis. Important Terms Creative accounting. Accounting Policies. As we have alredy discussed, it is important to compare in order to be able to analyse and to be able to comment and subsequently recommend in order that a business is as efficient as possible. Limitations of Ratios Accounting Information Different Accounting PoliciesThe choices of accounting policies may distort inter company comparisons. Example IAS 16 allows valuation of assets to be based on either revalued amount or at depreciated historical cost. The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit. Creative accounting The businesses apply creative accounting in trying to show the better financial performance or position which can be misleading to the users of financial accounting. Like the IAS 16 mentioned above, requires that if an asset is revalued and there is a revaluation deficit, it has to be charged as an expense in income statement, but if it results in revaluation surplus the surplus should be credited to revaluation reserve. So in order to improve on its profitability level the company may select in its revaluation programme to revalue only those assets which will result in revaluation surplus leaving those with revaluation deficits still at depreciated historical cost. Information problems Ratios are not definitive measuresRatios need to be interpreted carefully. They can provide clues to the companys performance or financial situation. But on their own, they cannot show whether performance is good or bad.Ratios require some quantitative information for an informed analysis to be made. Outdated information in financial statementThe figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the companys current financial position. Historical costs not suitable for decision making IASB Conceptual framework recommends businesses to use historical cost of accounting. Where historical cost convention is used, asset valuations in the balance sheet could be misleading. Ratios based on this information will not be very useful for decision making. Financial statements certain summarised informationRatios are based on financial statements which are summaries of the accounting records. Through the summarisation some important information may be left out which could have been of relevance to the users of accounts. The ratios are based on the summarised year end information which may not be a true reflection of the overall years results. Interpretation of the ratioIt is difficult to generalise about whether a particular ratio is good or bad. For example a high current ratio may indicate a strong liquidity position, which is good or excessive cash which is bad. Similarly Non current assets turnover ratio may denote either a firm that uses its assets efficiently or one that is under capitalised and cannot afford to buy enough assets. Comparison of performance over time Price changesInflation renders comparisons of results over time misleading as financial figures will not be within the same levels of purchasing power. Changes in results over time may show as if the enterprise has improved its performance and position when in fact after adjusting for inflationary changes it will show the different picture. Technology changesWhen comparing performance over time, there is need to consider the changes in technology. The movement in performance should be in line with the changes in technology. For ratios to be more meaningful the enterprise should compare its results with another of the same level of technology as this will be a good basis measurement of efficiency. Changes in Accounting policyChanges in accounting policy may affect the comparison of results between different accounting years as misleading. The problem with this situation is that the directors may be able to manipulate the results through the changes in accounting policy. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. It is likely to be done in a sensitive period, perhaps when the businesss profits are low. Changes in Accounting standardAccounting standards offers standard ways of recognising, measuring and presenting financial transactions. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years. Impact of seasons on tradingAs stated above, the financial statements are based on year end results which may not be true reflection of results year round. Businesses which are affected by seasons can choose the best time to produce financial statements so as to show better results. For example, a tobacco growing company will be able to show good results if accounts are produced in the selling season. This time the business will have good inventory levels, receivables and bank balances will be at its highest. While as in planting seasons the company will have a lot of liabilities through the purchase of farm inputs, low cash balances and even nil receivables. Inter-firm comparison Different financial and business risk profileNo two companies are the same, even when they are competitors in the same industry or market. Using ratios to compare one company with another could provide misleading information. Businesses may be within the same industry but having different financial and business risk. One company may be able to obtain bank loans at reduced rates and may show high gearing levels while as another may not be successful in obtaining cheap rates and it may show that it is operating at low gearing level. To un informed analyst he may feel like company two is better when in fact its low gearing level is because it can not be able to secure further funding. Different capital structures and sizeCompanies may have different capital structures and to make comparison of performance when one is all equity financed and another is a geared company it may not be a good analysis. Impact of Government influenceSelective application of government incentives to various companies may also distort intercompany comparison. One company may be given a tax holiday while the other within the same line of business not, comparing the performance of these two enterprises may be misleading. Window dressingThese are techniques applied by an entity in order to show a strong financial position. For example, MZ Trucking can borrow on a two year basis, K10 Million on 28th December 2003, holding the proceeds as cash, then pay off the loan ahead of time on 3rd January 2004. This can improve the current and quick ratios and make the 2003 balance sheet look good. However the improvement was strictly window dressing as a week later the balance sheet is at its old position. Ratio analysis is useful, but analysts should be aware of these problems and make adjustments as necessary. Ratios analysis conducted in a mechanical, unthinking manner is dangerous, but if used intelligently and with good judgement, it can provide useful insights into the firms operations.

ICD-10-CM Essay

The Changes between ICD-9 and ICD-10 code sets. Differences between ICD-10-CM and ICD-10-PCS code sets. How ICD-10 coding could affect patient encounters. How the transition will affect departments. Regulatory requirements. Quality Improvement. Clinical Documentation Improvement. The challenges and barriers of ICD-10-CM/PCS coding transitions. Create a checklist for the staff. The font or typeface I will use or script-like fonts around 14, in bold those typically work better as heading fonts rather than body text and 12 for the body. I use of visuals communication would help me effectively deliver my message on the important issues with documentation and with the pictures and graphs, showing gains and loss of loss revenue would help them understand what is required for compliance and increase revenue. I will also show the standard required to be in compliances with The Joint Commission rule and regulations. The reason for my choice for training materials because is easiest way too explained and train the staff with all the new changes. These training sessions will be workshops and departmental in-services with custom design to fit each service needs. My training or transition would start with and introduction to explained in detail the new system of ICD-10 The ICD-10 Transition The ICD-9 code sets used to report medical diagnoses and inpatient Procedures will be replaced by ICD-10 code sets. This fact sheet provides background on the ICD-10 transition, general guidance on how to prepare for it, and resources for more information. About ICD-10 ICD-10-CM/PCS International Classifications of Diseases, 10th Edition, and Clinical Modification Procedure Coding System consist of two parts. 1. ICD-10-CM for diagnosis coding outpatient 2. ICD-10-PCS for inpatient procedure coding. ICD-10-CM for use in all U.S. health care settings. Diagnosis Coding under ICD-10-CM uses 3 to 7 digits instead of the 3 to 5 digits used with ICD-9-CM, but the format of the code sets is similar. ICD-10-PCS is for use in U.S. inpatient hospital settings only. ICD-10Â ¬ PCS uses 7 alphanumeric digits instead of the 3 or 4 numeric digits used under ICD-9-CM procedure coding. Coding under ICD-10-PCS is much more specific and substantially different from ICD-9-CM procedures coding. The transition to ICD-10 is occurring because ICD-9 produces limited data about patients’ medical conditions and hospital inpatient procedures. ICD-9 is 30 years old, has outdated terms, and is inconsistent with current medical practice. Also, the structure of ICD-9 limits the number of new codes that can be created, and many ICD-9 categories are full. This New Patient Summary table demonstrates the required levels of the 3 key components for E&M code selection: History, Exam, and Medical Decision Making; elements must be met in all 3. This New Patient Summary table demonstrates the required levels of the 3 key components for E&M code selection: History, Exam, and Medical Decision Making; elements must be met in all 3. Next I would add a example of E&M codes with procedure and continue through the most common outpatient services and I would start with the inpatient process. I hope with the review and and example and other training aids the medical staff would understand that it more important than ever with the documentation and explained in different scenario how it could affect you and patient legally and medically, when treatment is not documented. Using visual most times it help, just not just having a boring training where you know no ones is paying attention. I will use other visual aids and charts on a few different power points. Since it so much information to take in I will do a basis summary of the changes. In Addition I will complete on training aids using what the Department of Veterans Affairs adding some of my material making it more customize for our Medical Center breaking it up so the staff wouldn’t get overwhelm. Iexplain and show them that structurally, ICD-9-CM is running out of room to add new codes. New diagnosis codes are submitted by medical societies, quality monitoring organizations and others annually. ICD-10-CM will allow not only for more codes but also for greater specificity and thus better epidemiological tracking, analysis of disease patterns and treatment outcomes, supports quality measurement efforts, and leads to accurate reimbursement and supports waste, fraud and abuse initiatives. Health Information Management(HIM) my department will have assessment each of coding staff they will be the first to complete the training along with the doctors. The doctors training will be more on documentation. The doctors will need to document to the level of ICD-10 allows for very specific code assignment when provider done. The coders will train more on how to select the correct codes. My finial decision will be the following steps 1.ICD-10 Training ICD 2.ICD-10-CM Anatomy and Pathophysiology 3.ICD-10 Proficiency Assessment 4.ICD-10 Documentation Training for Physicians (detailed) 5.Implementation ICD-10-CM My Duties As The Medical Records Administration Management ability to delegate authority, evaluate and oversee people and programs, recognize and adapt to changing priorities; and Knowledge of the interrelationships and interdependencies among various medical and administrative services and programs. Teaching or instructing in an adult education program, secondary school, college, military installation, or industrial establishment in the appropriate field(s). Supervising or administering a training program. Development or review of training/course materials, aids, devices, etc., and evaluation of training results. Work in the occupation or subject matter field of the position to be filled that required training or instructing others on a regular basis. Regulations and standards of various regulatory and credentialing groups; and Government-wide, agency, and facility systems and requirements in various administrative areas such as budget, personnel, and procurement. Planning, developing, and directing a medical records program for a health care facility that meets both institutional goals and standards of accrediting agencies. Evaluating and analyzing the organization and operation of medical records services, including medical records and indexes, and recommending and/or implementing appropriate revisions and modifications. Assisting medical and administrative staff in evaluating the quality and appropriateness of patient and health care services. Designing information systems to collect, analyze, monitor, report, and maintain privacy and confidentiality of patient and institutional data for health care related programs, and evaluating and implementing changes to assure the reliability of data. Developing and implementing policies and procedures for processing legal medical documents and insurance and correspondence requests in accordance with Federal, State, and local statu Refernce Search Ask Pictures http://www.search.ask.com/pictures?q=new&o=APN10092&lang=english&tpr=3&gct=bar Search Ask celabration http://www.search.ask.com/pictures?q=balloons+celabration&o=APN10092&lang=english&tpr=2&gct=bar Department of Veterans Affairs http://vaww.vhaco.va.gov/him/

Finding the Best Custom Written Research Papers

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Taking a Look at the Zodiac Killer - 1610 Words

The Zodiac Killer is one of the greatest unsolved serial killer mysteries, after Jack the Ripper. There were 2,500 suspects, but the case was never solved. The Zodiac’s first known victim is Cheri Jo Bates. His first letter, Confession, mentioned Cheri and said, â€Å" she is not the first and she will not be the last†. Six months after Cheri’s death, the killer sent copies of the letters to the Riverside Press, the police, and her dad. Since the killer knew her dad, the police thought that Cheri knew her killer or he knew her. One of the suspects for her murder was her ex-boyfriend. Cheri’s murder was controversial and there is no evidence that the Zodiac was her killer( Wark,1). On December 20, 1968, David Authur Faraday and Betty Lou Jensen were shot to death. Six months later, July 5, 1969, Darlene Elizabeth Ferrin and Michael Renault Mageau were shot in Blue Rock Springs Park in Benicia(Wark,1). When the killer approached them, they thought he was a police officer because he had a flashlight aimed towards them.Mageau was reaching for his ID when the killer started shooting. The killer shot at Mageau first, hitting him in the face and body(Wark,1). Since the killer was close to them, the bullets went through his flesh and into Darlene. Michael moved himself to the back seat and got shot in the knee. The killer then shot Darlene in both of her arms and in her back as she tried to turn away(Wark,1). A nearby resident, George Bryant, heard the gunshots and said theyShow MoreRelatedThe Zodiac Killer And The Misfit1358 Words   |  6 PagesMyranda Elkin Dr. V. Hunt ENC1102 13 November 2016 Righteous Degenerate What do Adolf Hitler, The Zodiac Killer and, The Misfit all have in common? They are psychopathic murderers. Psychopaths do not feel therefore they cannot have morals in the same way normal people do. 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