A strategic initiative in a business organization is a comprehensive plan that links up the companies’ objectives and its future goals and visions. Based on the results and outcomes from the SWOT analysis we conducted, as a measure to assess the establishment’s strengths, weaknesses, opportunities, and threats, my team came up with a tremendous life-changing initiative to upgrade the financial management of the DIVERSICARE HEALTHCARE organization. Referring to the financial statements we looked into, one of them being the organization’s income statement, it is discovered that the business was not on a sound financial footing and hence required critical and quick changes to rescue it from potential financial crises.
Some of the changes agreed upon for the organization’s financial betterments were that the organization would look into ways of reducing operational costs as lowest as possible to increase its gross profit. Reduction of these costs will create room to reduce expenses on the business, and hence with fewer expenses, the revenue increases; therefore, the organization will increase profit. For the coming financial years, an increase in sales revenue was also suggested by strategizing on the best possible ways to bring revenue in. The revenue would be increased by reducing the overall labor costs for the business, reducing the insurance premiums, and finally reducing the organization’s utilities to maximize incomes and save on expenses (Fischer et al., 2018). All these changes set aside had the same outcomes, and that was that it would have maximized and stabilized the business’s financial standing by increasing its revenue and hence a high business growth rate.
The budget figure below illustrates the proposed comprehensive plan and a simple budget to accomplish all changes and obligations after the financial management was revised and improved.
In this simple illustration of our budget, there will be a profit of $6500 in that financial year if all strategies are followed.
A budge of recent and previous financial statements was examined and tested to convey and understand the organization and the financial standing or performance of the business. Key financial statements of the organization were looked into and reviewed to try and get a clear glimpse of the current financial existing data. Many families use many financial statements such as balance sheets and income statements compared to annual accounts(Fernandez et al., 2018). Analysis of this balance sheet can provide several different reviews to the analysts. Some analysts consider the firm’s equity to be from the deduction of the liabilities from the assets, while others look into the firm’s entire capital.
The income statement accesses the income a business earns and the cost of the expenses involved in its operational activities within the company. Management of income by examining income statements reduces the taxable income content, and therefore firms defer information by managing accounting income (Hamedian et al.2016). It also shows with clarity all direct and indirect expenses a company incurs. For example, in the profit and loss account, total sales were $100000 while the expenditures totaled $ 115000 hence giving a noticeable loss of &15000 in the data we examined during the research. In conclusion, all three financial statements co-relate and work together to provide an overview and information about the business’s financial standing. Hence, the analysts should consider reviewing current data to make a sound decision and financial planning on any strategic initiative.
References
Fischer, D., & Roberts, L. B. (2018). Strategic thinking and planning. Rowman & Littlefield.
Fernandez, P., Fernnndez Accn, I., & Ortiz Pizarro, A. (2018). Meaning of the P&L and the balance sheet: Madera Inc. SSRN Electronic Journal. Web.
Hamedian, H., Rahdarian, A., & Kavyani, M. (2016). Taxable income management and information content of income. International Journal of Information Quality, 4(2), 83. Web.