What are the primary uses of financial information?

In finance, certain information in pertinent to the decision-making process. The text describes five uses of financial information as primary. They include: evaluating the financial condition of an entity, evaluating stewardship within an entity, assessing the efficiency of operations, assessing the effectiveness of operations, and determining the compliance of operation with directives. The financial condition of an entity is the most common use of financial information. In order to reach the goals of an organization, its financial condition should have the capacity and viability to have a consistent level of activity. Financial condition must also be assessed in order to keep the economy running smoothly and efficiently. Good stewardship of financial information is also imperative for running a business. The prevention of loss of assets and resources is very important, and is achieved by effective stewardship. If a business has infrequent occurrences of fraud, there probably is an efficient accounting system in place to avoid those types of infractions. Understandably, efficiency is crucial when handling financial information. It is simple on the surface, describes as strictly outputs to inputs; the lowest possible cost of production. While efficiency deals with outputs to cost, effectiveness deals with the attainment of objectives through production of outputs. Lastly, financial information can be used to make sure organizations are in compliance with directives. All of these uses for financial information are related to the success of any business. Specifically, to healthcare and the many government laws and rules and regulations, financial management can prove to be a tall order. But, if the honest and effective use of financial information is done correctly, organizations of healthcare and other business should flourish.

Cleverley, W.O., Song, P.H., & Cleverley, J. O.(2011). Essentials of healthcare finance(7th ed.). Sudbury, MA: Jones and Bartlett Learning.