Methods of Analysis in Health Care Research Paper

Methods of Analysis in Health Care - Research Paper Example Horizontal analysis informs about how different items in the balance sheet and income statement behave in many years. This particular type of analysis reveals how the performance of the firm has been affected over the years due to environmental factors. This analysis is also important information regarding cyclical demand trends and helps understand fluctuations of demand for a firm. This particular analysis can be used in health care industry to understand reasons of increasing costs over many years. Through this analysis one can know the main areas due to which health care costs is increasing. Horizontal analysis will tell which elements have contributed to the increase in costs and which have remained fairly constant over many years or accounting periods. Vertical analysis is a form of financial analysis in which elements of financial statements are presented in a percentage form of total elements (Haber, 2004). This type of analysis presents all information of a particular account, for example liabilities, in percentage form of the total value of that particular account or element. Vertical analysis focuses on proportions and attempts to guide decision making based on how much weight or proportion a particular element in the balance sheet has. Through this analysis, firms can know easily what proportion of a particular asset, like cash or receivables, is present in the total assets of the company. This analysis can guide decision making by highlighting which areas have are important for the firm and which are not. Vertical analysis can be used in health care by managers to understand the nature of their debt. This analysis can tell managers regarding how much debt is due in the short term and how much is due later. Ratio analysis involves analyzing different aspects of a business including efficiency, leverage, debt, profitability etc (Siddiqui, 2006). This type of analysis focuses on the relationships between different factors