Healthcare Management

Running Head: FINANCIAL ANALYSIS

Choice between Rehabilitation Centre and Neonatal Wing

Abstract

The present case relates to a situation in which a person has been appointed in the financial department of a major non profit hospital. The duty of the appointed person is to make sure that the day to day accounting activities such as budgeting, management of the ledger and training of the subordinates is done in an efficient manner in the organization. The organization is looking forward to invest some money into a new project. The resources available with the organization are scarce and it has to decide between two projects. The first option available with the organization is opening up a Rehabilitation Centre and the second option is Neonatal Wing. The paper shall discuss about the two options on the basis of Net Present Value, profitability index and return on investment and then decide about the best option for the non profit hospital.

Introduction

Net present value, return on investment and the profitability index are three particular methods which are used by the organizations around the world for the purpose of determining the project which should be selected by the organization in the case of scarce resources. These methods help the organization to utilize its resources in a proper and efficient manner without any kind of problem (Berry, 2005).In the present case the non-profit hospital has to decide between the projects of rehabilitation centre and neonatal wing. The paper shall discuss about these two projects in detail.

Net Present Value

The method of net present value is a very important method which is used by the organizations for the purpose of taking the decisions regarding the investment to be made in the project. For this analysis, the net present value of the projects is determined and then the project which has higher net present value is selected by the...