Capital Budget Proposal for Memorial Sloan-Kettering Cancer Center

Financial Statements of Memorial Sloan-Kettering Cancer Center

In making proposal for Memorial Sloan-Kettering Cancer Center we will require some financial data to make the proposal appropriate. Key financial statements such as balance sheet and income statement will be used to collect information about the previous year transactions, income, costs and reserves. Income statement will be used to understand financial position of the company in regards to revenue earned, net income generated and cost incurred in the operations. While balance sheet will help out in getting idea about the available assets and liability of the company(Peterson & Fabozzi, 2004). Cash account of balance sheet will describe how much financial resources we can get to work on this proposal. 

Proposal Impact of Memorial Sloan-Kettering Cancer Center

Proposal can influence the financial statements of the company. Successful completion of proposal willcause to increase net income in Income statement. While balance sheet will also increase its plant asset with the establishment of new hospital or medical center in the new market.

Flexed Versus Fixed  of Memorial Sloan-Kettering Cancer Center

Flexible and fixed budget are quite different. Flexible budget will get changes in response to change in the activity level presented in the proposal. While on the other hand, fixed budget will remain fixed even activities gets changes. Flexible budget can provide more realist view of the whole proposal as it can better present the possible outcomes in result of changes in the output or input(Peterson & Fabozzi, 2004). While fixed budget will provide static outcome with no changes because of increase or decrease in the activities. 

Proposal Justification of Memorial Sloan-Kettering Cancer Center

Proposal justification section cover two major areas that are ratio analysis and explanation of impact generated by the proposal on the overall financial business of the hospital.   

Ratio Analysis of Memorial Sloan-Kettering Cancer Center

In this project most appropriate ratios will be selected to support this proposal. Selected ratios are profitability ratios including ROE, ROA, and profit margin ratio. These ratios can present the return on the investment therefore we will use these ratios to conclude that how return or profit will change because of this proposal. The following table represents the profitability ratios of 2017 and estimated profitability ratio of this proposal.  

In accordance to these analysis we can say that in case proposal increase 30% revenue then overall financial position of the MSK will get profitability.

Short and long term Impact  of Memorial Sloan-Kettering Cancer Center

Proposal will result in the increase of cost in the initial years as new project will take financial resources from the reserves or assets of the MSK.  But long term impact is quite profitable for MSK as it can increase services revenue and market capitalization. Thus investment made by MSK in this year will bring benefits for the future years and MSK will get more opportunities in the market.  

Appendix

Annual report used in ratio analysis

References of Memorial Sloan-Kettering Cancer Center

MSKCC. (2019). About Us. Retrieved March 29, 2019, from https://www.mskcc.org/about

mskcc.org. (2019). Our Locations. Retrieved March 29, 2019, from https://www.mskcc.org/locations

Peterson, P. P., & Fabozzi, F. J. (2004). Capital Budgeting: Theory and Practice. John Wiley & Sons. Retrieved 2019