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Omega Health Financial Position Essay

912 words - 4 pages

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Omega Health Financial Position |
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Fin/HC 571 |
12/19/2011 |

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Overview
This paper is being prepared to explain the financial position of Omega Health Foundation and to also provide recommendations to strengthen its financial situation. In doing so we will explain the principles of finance and how they relate to Omega Health Foundation’s financial position while comparing and contrasting Omega’s net income and cash flow as well as their market and book value of the assets. We will also address the weakness and strengths are applicable of Omega Health Financial position. Lastly, recommendations will be made so that Omega can strengthen its financial position as well as ...view middle of the document...

The main advantage of non-profits is their tax advantage. The negative is that they operate not for profit therefore they do not make any money and are solely funded by grants, donations etc., whether there was a profit or a loss as well as something as simple as budget for ordering supplies. A cash flow statement is said to be the most important financial statement because it traces the flow of cash into and out of a company. According to our text, the cash flow statement gives additional information on the flow of funds within an entity (Cleverly, 2007).
Net Income vs. Cash Flow
Cash rules everything around us, therefore cash flow is better and harder to manipulate due to GAAP regulations. A company that is not generating cash will not make it in the long run. Net income is the remaining amount of profit once everything has been paid. “Omega Health Foundation derived $23,878,000 of cash flow from operating activities during 2009” (Cleverly & Cameron, 2007, p. 178). Although a profit is important many companies rely on cash flow statements to correct issues within a previous year. There is no set law that states that one has to be higher than the other. According to Peavler, ccompanies can make a profit but still have a negative cash flow and not be able to pay their expenses (Peavler, 2011).
Book Value vs. Market Value
Simply stated, market value is the amount or value of an item based on what it will sell for in today’s market. Book values are generally is the set value on what an item is worth depending on the age and specs of the item. In Omega Foundations case, they experienced a significant reduction in 2009 therefore the market value of the stocks decreased $498,000 which will result in a realizable gain...

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