K/618/2712 Managing Finance Health Social Care Assignment Sample

Introduction Of K/618/2712 Managing Finance Health Social Care Assignment

Financial management is the process of analysing, monitoring, controlling and reporting the financial statements. This helps in the organisation's decision-making by combining the management and accounting that supports the process. The organisation chosen for this report is Anchor Trust, a health and social care service provider based in England. These provide housing and care facilities to the old people in the country (Anchor, 2025). This report consists of two tasks that will focus on presenting the preparatory and business reports. It will cover the various concepts including the importance of the accounting, key financial ratios, process of budgetary control and evaluation of capital expenditures and investment projects.

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Task 1 Preparatory Report

Importance of accounting and finance management

Accounting and finance management play a crucial role in the health and social care organisations in the following manner:

• Financial stability: This helps the organisation in meeting the need of the funds in the company. This provide with the need of the finance that is needed by the organisation to operate and meet the day-to-day operations (Robert et al, 2023). It provides with the information on the available funds and need in the future which can make the service to have stable and enough funds for working.
• Resource allocation: This helps in the allocation of resources such as finance. This helps in channelizing the resources in the areas where it is required the most and where it can be reduced. In this manner, the managers can identify the need and efficiently utilise the available resources.
• Regulatory compliances: This helps in preparing the reports and presenting the full transparency of the activities in the organisation (Al-Hashimy et al, 2022). It is beneficial in meeting the regulatory compliances and shows the operations undertaken by the organisation.
• Informed decision making: This gives information on the performance that helps the managers in the process of decision-making in the organisation. This ensures that the decisions made are accurate and real on the basis of the financial data.

Utilisation of financial software

Financial software such as QuickBooks Online, Xero, Zoho Books, etc., are the automatic tools that help in the process of the accounting in Anchor Trust. The uses of this accounting software are given below:

• Transaction Recording: These software help record and track the transactions automatically (Finkler et al, 2025). This helps in the billing, recording the purchase of assets in the healthcare organisation, expenses, etc. These operations are done with accuracy and less chance of mistakes and errors.
• Financial Reporting: It is beneficial in the financial reporting that helps in the generation of the financial reports for the organisation. This automatically generates the summary and information analysis of the transaction of the organisation.
• Budgeting and forecasting: This helps Anchor Trust in the creation of the budgets for the organisation using past records and data. The use of these software also benefits in making the prediction for the future (Lai, 2022). Through this, the organisation can prevent itself from the uncertain risks and unforeseen situations.
• Payroll management: The organisation have to pay the salaries to the staff. This can be managed by using the software that automatically calculates, deduct the amount and shows the amount payable. This maintains the accuracy and transparency in the salary to be paid and can be accessed by the staffs at any time by their own.

Key financial ratios

The health and social care use the financial ratios to assess the financial health of the organisation which is given in below:

• Liquidity ratio: This ratio gives the information on the organisation ability to meet the short term obligations. There are several liquidity ratios such as current ratio, quick ratio, debt-to-equity ratio, etc. (Liu et al, 2023). For example, through the calculation of this, the Anchor Trust finds the availability of the liquid asset that can be readily convertible into cash. This helps in the payment of the day-to-day operations of the organisation.
• Profitability ratio: These are the ratio that are used by the organisation to access to the profit made from the services offered. These ratio involves gross margin, operating margin, net profit margin, etc. (Di Domenico et al, 2022). For example, the Anchor Trust based on the operating margin finds the revenue left after the deduction made in the operating expenses.
• Solvency ratio: This are effective in giving the information on the organisation’s ability to meet the long term debt. The various ratio comes under this category are debt-to-equity, interest coverage ratio, etc. For example, Anchor Trust uses the debt-to-equity ratio to estimate the availability of the borrowed funds and the effectiveness in meeting the operations in the organisation.

Difference between long and short term business finance needs

The difference between the long term and short term finance needs is given as below:

• Duration: Long term businesses finance is focused on meeting the need that goes beyond a year. On the other hand the short term finance is helpful in meeting the requirement for the period less than one year.
• Purpose: Long term finance need is beneficial to meet the expenses on the purchase of heavy equipment, building, technology, etc. (Bisht et al, 2022). On the other hand, short term finance is effective in fulfilling the requirement for the day-to-day operations which can involve payment of the use of utilities such as electricity, payment of the interest rate on the loans, salaries, etc.
• Interest rate: The interest rate in the long term finance is lower which reflects the easy repayment of the funds taken in the long period of time shows low risk to the lender (Sharma and Mittal, 2023). The short term finance have usually higher rate which makes the organisation to repay it in short duration shows high risk to the lender.
• Repayment of the debt: The long term finance is paid less frequently and have large amount of instalments. In comparison to this, the short term have to pay in small instalment which is more frequent.

Benefits and limitations of various sources of finance

There are various sources of finance available to an organisation that have both benefits and limitations which are given as below:

• Debt financing or Bank loan: The bank loan is the fund raised by taking the debt from the banks and other financial institutions. The benefit of this is that it is easy and fast form of capital funding that can be used by the organisation (Sun, 20223). It also provides the certain amount that can be beneficial to meet the long term finance requirement. The limitation of this is that is requires to pay the interest rate on the amount raised which can be an additional expense for the organisation.
• Grants and donation: These are the amount received by the organisation from other association usually for the purpose of non-profit work. These have advantage as it does not require to be paid back and are free source of finance (Chavali et al, 2021). It also helps in improving the reputation of the organisation. However, certain limitations associated with this is that it is not so easily available and the donor may control the use of the funds in a particular manner.

Process of budgetary control and revenue management

The budgetary control process planning, managing and controlling of the financial resources in the health and social care organisation. This is effective in allocating the financial resources in an effective manner. The process of budgetary control followed by Anchor Trust is given as below:

• The preparation stage where the planning is made and the statements are evaluated on the basis of the records.
• At Implementation stage, the budgets created are implemented on the basis of which the activities are undertaken.
• Monitoring is done to find out if there are any variations such as the additional need of equipment for treating the patient which was not in the budget (Karim et al, 2024).
• The measurement are taken to ensure that the work is going as per the budget planning and control.

Revenue management emphasis on the management of the revenue creation in the health and social care organisation. The process for the same followed by Anchor Trust is given below:

• The organisation need to create the pricing strategy that can cover the cost and meet the expenses.
• The demand forecasting helps in the estimation of the patient who can come for treatment that helps in optimising the revenue for scheduling and resource allocation.
• Billing is the recording of the transactions and receipts paid by the patients through proper documentation.
• Regular analysis is to be done that keep track of the records and trends in the sector.

Rules of double-entry book-keeping

Double-entry book-keeping is the process of recording the transaction where the entry is made in two corresponding accounts that is on the debit and credit side (Net suite, 2023). This follows certain rules in the process which are provided as follows:

• The debit is always written to the right and credit on the left.
• Every debit transaction entry must have a corresponding credit entry.
• The total of the debit side must be equal to the credit side for every transaction recorded.
• Here the total asset are required to be equal to the expenses.
• Debit increases the asset account and decreases the liability account. On the other hand, the credit increases the liability and decreases the asset.

It is used to record the transactions that are error free and accurate. This is beneficial for Anchor Trust in avoiding any fraud and keeping the track of the transactions done in an organisation. It creates the financial statements such the profit and loss account and balance sheet on the basis of the trial balance (Timespro, 2023). For example, the organisation for the purpose of expanding the working and healthcare facility has purchased the property for £500,000. The entry for the same is given as below:

Account	Debit	Credit
Property	£500,000	-
Liability (Mortgage)	-	£500,000

The above example shows that due to the asset there is increase in the debit and corresponding entry is made in the credit side which shows the liability of the organisation.

Task 2 Business Report

Interpretation of organisational budgets

Organisational budget refers to the financial plans that helps in forecasting the resources of the organisation. This is effective in meeting the operational efficiency and taking the decisions regarding in the health and social care firm. There are several types of organisational budgets such as operational, capital, cash, master, etc. (Cleverley et al, 2023). For example, Anchor Trust is planning to conduct the health care check-up event. For this purpose, the organisation need to prepare the budget that can provide the information on the availability of the funds for the operations. Based on this, Anchor Trust will channelize the funds into the various activities in organising the check-up event. This organisation chose to prepare the operating budget for this purpose (Mrinska, 2010). This budget helps in the estimating the revenue and expenditure based on the day-to-day activities.

Volume
Low	Medium	High
Patient revenue	£8000	£10000	£12000
Less operating expenses:
Salaries	(£4200)	(£5000)	(£5600)
Benefits	(£840)	(£1000)	(£1120)
Other expenses	(£2200)	(£3100)	(£3400)
Interest	(£120)	(£120)	(£120)
Depreciation	(£300)	(£300)	(£300)
Total expenses	(£7660)	(£9520)	(£10540)
Projected profit	£340	£480	£1460

It can be interpreted from the above operating budget that the maximum estimated amount to be earned from the patient would be £8000, the medium amount would be £10000 and the highest value is £12000. Through this, the organisation can forecast the earning that can be generated from the check-up event organised by this. This shows the total minimum and maximum earning that the healthcare provider need to consider while working. The operating cost in the budget shows the salaries to be paid, benefits, other expenses, interest and depreciation. The maximum salaries to be paid is estimated at £5600 and minimum would be £4200. Moreover, the highest benefits to be provided are £1120 and lowest would be £840. The other expenses for the Anchor Trust can be £2200, £3100 or high £3400.

The interest rate paid is valued at the £120 which remain as fixed. The fixed charges on the depreciation is valued at £300. On the basis of all these expenditure the highest cost incurred is £10540 and minimum is £7660. After paying off all the expenditure, the projected profit can be calculated. This is the net profit of the organisation which is estimated to be minimum of £340, medium £480 and £1460 as the highest amount to be earned through profits. This is effective in guiding the Anchor Trust in planning the operations during the check-up event. It provides the guide in allocation of the finance in the area which lead to work on the basis of the plan and attain the aim (Waxman and Knighten, 2022). The profits earned shows that the Anchor Trust is optimising its working and expenses need to be managed to earn high amount. There is not much margin between the revenue and expenditure. For this purpose the healthcare provider need to either optimises the way to raise the income or reduce the cost for better profits.

Evaluation of capital expenditures

Capital expenditure refers to the funds spend by the organisation for acquisition, maintenance and up gradation of the asset. The asset can include the land, property, machinery, equipment, technology, etc. For this purpose the organisation need to invest in the projects by analysing the risk and return on this (Anchor, 2025). The one that has more profitability associated with it is chosen. There are several investment appraisal techniques that can be used to analyse the project feasibility and profitability which are given as below:

• Payback period: This is one of the simplest and most common form used to estimation on the project return. It estimates the time duration in which the organisation can gain the return and cover the initial cost of the investment on the capital. For example, there are two projects available for the organisation to invest and on this the organisation have to make the decision. The amount to be invested is £100,000 on the purchase of the technology and amount to be returned is £10000 in 2 years and B will give £100000 in 2.5 years. So, this makes it clear that the organisation will chose the Project A which is more effective in covering the cost in minimum time.
• Accounting rate of return: It helps in estimating the profits that are expected to achieve from the investment. This provides with the simple calculations to calculate the profits and does not involve any complexity in the process (Baum et al, 2021). It shows the net profits from the investment and also known as the return on investment or return on capital. It is calculated by the percentage of average annual profit after the tax deductions by initial investment. For example, Anchor Trust is to invest in the new equipment for better patient treatment which cost at £420,000. This was estimated that the machinery would increase the revenue by £200,000 and expenditure by £50,000. This machinery would be useful for the life span of 10 years. The depreciation expense each year would be £42,000. The increase in the annual profit would be £200,000 – (£50,000 + £42,000) = £108,000.ARR = £108,000/£420,000 * 100 = 25.71%. This shows the return generated by the investment on the equipment will be 25.71%.
• Profitability Index (PI): This tells about the earning made on per pound sterling of investment. It is the ratio of the discounted cash flow to the outflow (Cowling et al, 2025). The value calculated is equal to or greater than 1 is considered to be good for the organisation. For example, Anchor Trust have to invest in a project for the purchase of new technology. The discounted flow of cash is £100,000 and initial outflow is £80,000. The PI is calculated is £100,000/£80,000 = 1.25 pound sterling. This is above the value of 1 so it is acceptable. This shows that the invested amount is capable to generate the value of 1.25 per pound sterling. The organisation can consider to invest in the project on the basis of this. 

Recommendations for financial management

Financial management focuses on strategizing, organising, and controlling of the finance of the organisation and channelize in the direction to achieve the organisational goal. Following are the recommendations to the Anchor Trust for better financial management:

• It is recommended that the company should use the modern methods in the budgeting and forecasting process. The budgeting is to be done by understanding the goal of the organisation and preparing the budgets on the detail basis using the innovative tools (Murray, Imison and Jabbal, 2014). It must be ensured that the use of innovative tools are free from any cyber-attack and also are regularly updated to avoid the loss of the records.
• This is also advised that the organisation should work on the making the risk management effective. Due to the continuous change in the external regulatory the organisation need to access the uncertainties that can occur in the future. It is helpful in taking the careful decisions in the investment in the new projects and establish the financial management by safeguarding the finance and effective use of the same.
• Reporting of the financial statements must be done regularly and in transparent manner. The regular analysis of the records such as cash flow statement, income statement, profit and loss, etc. are needed to be maintained accurately using the software and must be audited to avoid any issues and errors in the same.
• For better financial management, the organisation is suggested to work on training the staffs in the finance function with the latest information and trends in the financial sector. It avail the staff with more efficiency in the working of the finance department.
• Cost management is essential for the better financial management. The organisation need to work on reducing the cost and this is helpful in improving the performance and finances can be managed in better manner.

Conclusion

From the above report it is concluded that the financial management is significant for the organisation in maintaining its better financial health. It helps in the allocation of the funds in organised way. Moreover, the financial software is useful for the purpose of the recording, preparing reports, etc. There are certain ratio that tells about the stability of the organisation such as profitability ratio, liquidity ratio, etc. there are different investment appraisal techniques used for the evaluation of capital expenditure such as Payback period, Profitability Index, etc.

REFERENCES

Books and Journals

• Al-Hashimy, H.H., Alabdullah, T.T.Y., Ries, E., Ahmed, M.A., Nor, M.I. and Jamal, K.A.M., 2022. The impact of financial management elements and behavioral intention on the financial performance. International Journal of Scientific and Management Research, 5(12), pp.117-149.
• Baum, A.E., Crosby, N. and Devaney, S., 2021. Property investment appraisal. John Wiley & Sons.
• Bisht, D., Singh, R., Gehlot, A., Akram, S.V., Singh, A., Montero, E.C., Priyadarshi, N. and Twala, B., 2022. Imperative role of integrating digitalization in the firms finance: A technological perspective. Electronics, 11(19), p.3252.
• Chavali, K., Mohan Raj, P. and Ahmed, R., 2021. Does financial behavior influence financial well-being?. The Journal of Asian Finance, Economics and Business, 8(2), pp.273-280.
• Cleverley, W.O., Cleverley, J.O. and Parks, A.V., 2023. Essentials of health care finance. Jones & Bartlett Learning.
• Cowling, M., Liu, W. and Vorley, T., 2025. Who has an R&D investment opportunity? Who goes ahead? How much do they invest?. R&D Management, 55(2), pp.326-340.
• Di Domenico, S.I., Ryan, R.M., Bradshaw, E.L. and Duineveld, J.J., 2022. Motivations for personal financial management: A Self-Determination Theory perspective. Frontiers in Psychology, 13, p.977818.
• Finkler, S.A., Calabrese, T.D. and Smith, D.L., 2025. Financial management for public, health, and not-for-profit organizations. CQ Press.
• Karim, S., Lucey, B.M., Naeem, M.A. and Yarovaya, L., 2024. Extreme risk dependence between green bonds and financial markets. European Financial Management, 30(2), pp.935-960.
• Lai, M., 2022. Smart Financial Management System Based on Data Ming and Man‐Machine Management. Wireless Communications and Mobile Computing, 2022(1), p.2717982.
• Liu, H., Yang, B., Xiong, X., Zhu, S., Chen, B., Tolba, A. and Zhang, X., 2023. A financial management platform based on the integration of blockchain and supply chain. Sensors, 23(3), p.1497.
• Mrinska, O., 2010. Integrating Health and Social Care Budgets.