Understanding an Income Statement

You are an intern in a health care organization business office. Find an example of an income statement for a health care organization online and using the resources you have been provided under course content, please develop a 4-6 page paper responding to the following questions regarding the income statement:

  1. What is an income statement used for?
  2. What are the key components of an income statement?
  3. On your example of an income statement, is the organization making a profit or loss? How much is that profit or loss? Show the calculations. (Total Revenues – Total Expenses = Net Profit/Loss)
  4. On your example of an income statement, what is the “contribution margin”? Show the calculations. (Total Revenue – Variable Costs=Contribution Margin). You can use the assumption that volume is 15,000 if not included in financial statements.
  5. What three financial indicators does a contribution margin help determine? How?
  6. What is a break-even analysis? What is the break-even point for this organization? Show the calculations. (Total revenues – Total VC – FC= Profit)
  7. How does a break-even analysis vary between fee-for-service and capitated payments? Explain it using the income statement you chose. What are similarities and differences applicable to the Income statements in fee-for-service and capitated payment options?