Scottish Highers Business Management Budgets and Ratios: Using Exhibit 3, describe the ra

Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position - Scottish Highers Business Management - Question g - 2019

Question g

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Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position. Describe how the Statement of Financial Positi... show full transcript

Worked Solution & Example Answer:Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position - Scottish Highers Business Management - Question g - 2019

Step 1

Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position.

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Answer

NHS Health Scotland can calculate the Current Ratio from its Statement of Financial Position. This ratio is represented as the formula:

$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$

This ratio indicates the organization’s ability to pay short-term debts, showcasing its liquidity position.

Step 2

Describe how the Statement of Financial Position may be used by the Scottish Government.

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Answer

The Scottish Government can use the Statement of Financial Position to:

Value the organization: Understanding the financial health of NHS Health Scotland helps the government in making funding decisions.
Monitor the risk of debt: By assessing the liabilities, the government can evaluate the potential risk that might increase NHS Scotland's borrowing.
Predict future funding needs: The Statement provides insights into whether NHS Health Scotland will require additional funding in the future.

Step 3

Describe how the Statement of Financial Position may be used by Suppliers.

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Answer

Suppliers may utilize the Statement of Financial Position to:

Assess Payment Capability: Suppliers will review the financial standing to determine if NHS Health Scotland can pay for the goods and services they provide.

Step 4

Describe how the Statement of Financial Position may be used by Managers.

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Answer

Managers can use the Statement of Financial Position to:

Monitor and Measure Performance: They can evaluate the organization’s financial performance over time, helping them make informed operational decisions.
Evaluate Decisions: It serves as a basis for making strategic decisions regarding resource allocation and operational improvements.

Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position - Scottish Highers Business Management - Question g - 2019

Worked Solution & Example Answer:Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position - Scottish Highers Business Management - Question g - 2019

Using Exhibit 3, describe the ratio which NHS Health Scotland can calculate from its Statement of Financial Position.

Describe how the Statement of Financial Position may be used by the Scottish Government.

Describe how the Statement of Financial Position may be used by Suppliers.

Describe how the Statement of Financial Position may be used by Managers.

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