There are many different types of financial statements involved in Healthcare Finance and they are all very important. Balance sheets are crucial in providing needed information about businesses assets, liabilities, and shareholders equity. The balance sheet presents a snapshot of the financial position of an organization at a given period of time. This data changes as a business increases or decreases its assets or financing situation. Assets are physical property and supplies owned by the company, as well as things that hold value the company has invested in. Liabilities are responsibilities the company has to other entities on behalf of the company, i.e. rent. Shareholders equity is money that is left over that belongs to owners if the company sells. The balance sheet is set up in a simple manor, which is fairly easy to read.

The income statement will give a wealth of information about a company’s earning status over a certain time period. This statement shows how a company is fairing financially. The income statement reports a company’s profits, losses, shares, net income, operating expenses as well as income taxes.

Cash flow statements fluctuate due to the inflow and out flow of cash. The cash flow explains how much or little cash has been generated through the company, the income statement is not capable of that. The cash flow statement is divided into investing activities, operating, and financing activities. These three steps analyze a company’s cash flow from net loss; it shows flow from purchases i.e. plant, property, and equipment. And lastly, it shows cash flow by selling stocks and bonds or paying back a loan so to speak. Novartis is a leading company that is focused on developing and successfully marketing products that potentially will prevent and/or cure diseases. The purpose of these products is to enhance the quality of one life. Novartis is made up of pharmaceuticals, generics, eye care products, consumer health products, and vaccines and diagnostic tools.

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Novartis Financial Report

Income Statement 2010 2009

Net Sales

50,624

14,267

Operating Income

11,526

9,982

Return on Net Sales

22.8%

22.5%

Net Income

9,969

8,454

Basic Earnings per Share

4.28%

3.70%

Operating Income

14,006

11,437

Return on Core Net Sales

27.7

25.8

Net Income

12,029

10,267

Basic Earnings/Share

5.15

4.50

% Of Net Sales

16.0%

16.5%

Net Sales for US

15,863

2010 Net Sales:

Pharmaceuticals- 30,558

Vaccines and Diagnositcs-2, 918

Consumer Health- 6,204

2010 Core Operating Income:

Pharmaceuticals- 9,909

Vaccines and Diagnostics- 1,066

Consumer Health- 1,253

2010 Net Sales: US 10,043

Vaccines and Diagnostics-1, 184

Consumer health-2, 006

Balance Sheet 2010 2009

Number of Associates

119,418

99,834

Return on average Equity

15.7

15.7

Research and Development

8,080

7,287

Purchased Goods and Services

44%

48%

Taxes

15%

15%

Debt

19%

155

Equity

56%

60%

Liabilities

25%

25%

Statement of Cash 2010 2009

Dividend

2.20

2.10

Cash flow from operating Activities

14,067

12,191

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Free Cash Flow

7,860

5,505

Purchase of Intangible, non current and financial assets

693

1084

Non current assets

650

226

Operating income increased 15% on expanding its business and improvements. Net sales increased by 14% by increased growth. 22% of the operating income has increased. Net income has increased 18% and the core income has increased by 17%.

References:

Novartis.com/downloads/newsroom/corporate-publications/Novartis-annual-reporat-2010-en.pdf

Healthcare Finance. An Introduction to Accounting and Financial Management. Gapenski. 4th ed. September 2011. Health Administration Press. AUPHA.