| Course | DNP 840 Strategic Planning and Financial Management |
|---|---|
| Module | Module 6 |
| Paper type | Financial statement and ratio analysis |
| Length | About 1,056 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | DNP |
| Updated | September 2026 |
Free sample paper for DNP 840 Module 6
Can the System Afford It? A Financial Statement and Ratio Analysis Before Funding a Dementia Care Program
Student Name
Doctor of Nursing Practice Program, Aspen University
DNP 840: Strategic Planning and Financial Management
Instructor Name
Month Day, Year
Can the System Afford It? A Financial Statement and Ratio Analysis Before Funding a Dementia Care Program
Nurse leaders who propose new services are asking their organizations to spend money, and a request is more persuasive when it shows an understanding of the organization's financial position. Financial statements report that position, and ratios condense them into measures of profitability, liquidity, efficiency and capital structure that can be tracked over time and compared with peers (Finkler et al., 2013). This paper analyzes the composite health system's most recent statements, compares key ratios with the system's own three-year trend, places them in national context, and considers what they mean for the proposed dementia care program's two-year investment of $618,850: a cumulative operating loss of $378,850 and $240,000 in capital.
The Statements in Brief
The income statement covers one fiscal year of earnings and spending. The health system earned $1,120 million in net patient service revenue and $62 million in other operating revenue, for total operating revenue of $1,182 million. Operating expenses were $1,170 million, of which salaries and benefits made up $640 million, supplies $210 million, purchased services $150 million, depreciation $58 million, interest $16 million and other expenses $96 million. Operating income was therefore $12 million. Investment and other nonoperating gains added $28 million, for an excess of revenue over expenses of $40 million.
The balance sheet reports what the system owns and owes at year end. Unrestricted cash and investments were $420 million. Current assets were $360 million, including $150 million in net patient accounts receivable, and current liabilities were $220 million. Long-term debt was $380 million, and net assets were $640 million.
Key Ratios
The table summarizes eight ratios and the system's trend over three years.
| Ratio | Calculation | Two years ago | Last year | This year |
|---|---|---|---|---|
| Operating margin | Operating income / operating revenue | 3.1% | 2.2% | 1.0% |
| Total margin | Excess of revenue over expenses / total revenue | 4.0% | 3.6% | 3.3% |
| Days cash on hand | Unrestricted cash and investments / daily cash expenses | 162 | 150 | 138 |
| Current ratio | Current assets / current liabilities | 1.9 | 1.8 | 1.64 |
| Days in accounts receivable | Net receivables / daily net patient revenue | 44 | 46 | 49 |
| Debt to capitalization | Long-term debt / (long-term debt + net assets) | 39% | 38% | 37% |
| Salaries and benefits share | Salaries and benefits / operating revenue | 51.8% | 53.0% | 54.1% |
| Nonoperating share of results | Nonoperating gains / excess of revenue over expenses | 23% | 39% | 70% |
What the Ratios Show
Profitability is weakening. The operating margin, the best measure of whether the core business covers its costs, fell from 3.1% to 1.0% in three years, while the total margin held up better because investment returns filled more of the gap. This year, 70% of the system's bottom line came from nonoperating gains, which vary with financial markets and cannot be counted on. Rising labor costs, now 54.1% of operating revenue, are the main driver.
Liquidity remains adequate but is slipping. Days cash on hand, the number of days the system could pay its cash expenses from unrestricted reserves, fell from 162 to 138, and the current ratio from 1.9 to 1.64. Days in accounts receivable rose from 44 to 49, meaning the system is taking longer to collect what it is owed, which ties up cash. Capital structure is stable, with debt at 37% of capitalization and slowly declining.
National Context
Thin operating margins are common among U.S. hospitals. An analysis of acute care hospitals in fiscal year 2013 showed that patient care, taken alone, ran at a loss for the typical hospital, with fewer than half earning a profit on it, and that profitability tended to fall as the Medicare share of patients rose (Bai & Anderson, 2016). A study of 2,824 hospitals from 2003 to 2013 found that those whose margins improved did so mainly by increasing revenue per bed, driven by higher payments from payers other than Medicare, rather than by cutting costs, and the authors noted that hospitals unable to raise prices would need to become more efficient (Ly & Cutler, 2018).
For the composite system, whose older population means a large and growing Medicare share, this context matters. Higher prices from commercial payers are unlikely to be a durable answer, so improvements must come from efficiency and from contracts that pay the system for keeping its patients' overall spending down.
Implications for the Dementia Care Program
In absolute terms, the program's two-year investment of $618,850 is small: about 0.05% of one year's operating revenue, and well within the system's cash reserves. The system can afford it. The ratios nonetheless shape how the request should be framed. With the operating margin at 1.0% and labor costs rising, executives will scrutinize any proposal that adds staff, and they will want to see how it supports the operating margin rather than depending on reserves.
The proposal should therefore emphasize three points. First, the program's revenue comes largely from payments that are new to the system, not from shifting existing revenue. Second, its expected effects on hospital use and long-term care placement align with the value-based contracts the system needs to succeed in as its Medicare share grows. Third, it has clear milestones: if enrollment and billing do not reach budgeted levels by the end of year one, leaders can slow hiring before losses grow. The request should also include billing and collection plans, since the system's rising days in accounts receivable show that revenue on paper does not always become cash promptly.
Limitations
Ratios describe; they do not explain. A declining operating margin could reflect deliberate investment as easily as poor control of costs, and only the notes to the statements and conversations with finance leaders can tell the difference. Comparisons across organizations are also limited by differences in accounting choices, such as how investment gains and pension costs are reported, which is why this analysis relies mainly on the system's own trend.
Conclusion
The composite health system's statements show a financially stable organization with a weakening core business: a 1.0% operating margin, falling liquidity and rising labor costs, offset for now by investment gains. The dementia care program's two-year investment is affordable, but the ratios argue for a request that shows how the program strengthens operating performance through new revenue and value-based contracts, includes a billing plan, and sets milestones that let leaders limit losses if targets are missed.
References
Bai, G., & Anderson, G. F. (2016). A more detailed understanding of factors associated with hospital profitability. Health Affairs, 35(5), 889-897. https://doi.org/10.1377/hlthaff.2015.1193
Finkler, S. A., Jones, C. B., & Kovner, C. T. (2013). Financial management for nurse managers and executives (4th ed.). Elsevier Saunders.
Ly, D. P., & Cutler, D. M. (2018). Factors of U.S. hospitals associated with improved profit margins: An observational study. Journal of General Internal Medicine, 33(7), 1020-1027. https://doi.org/10.1007/s11606-018-4347-4
What the DNP 840 Module 6 instructions ask for
Aspen does not release DNP 840 Module 6 instructions outside the course, so the example leans on the catalog wording about financial management for nurse leaders. A ratio assignment at this stage typically wants you to read an organization's financial statements, calculate key ratios, interpret trends and explain what they mean for decisions. Your prompt may supply statements or ask you to find a public report, such as a nonprofit hospital's audited financials or its IRS Form 990. Some instructors specify the ratios; others leave the choice to you. Include a table with each formula so a grader can check every calculation, and settle the page count and number of sources before drafting, since finance papers often run long once the tables are in.
How the DNP 840 Module 6 example is put together
This example runs about 1,055 words in seven sections. The statements in brief summarizes revenue, expenses, assets and liabilities in plain terms. Key ratios presents eight measures, including operating margin, total margin, days cash on hand, current ratio and debt to capitalization, with formulas and three years of results in a table. What the ratios show interprets the trends and explains why liquidity can look strong while profitability weakens. National context compares the results with published evidence. Implications for the dementia care program explain how the findings change the request. Limitations name what ratios cannot show, and the conclusion restates the answer to the question in the title.
Reading the DNP 840 Module 6 grading rubric
For a ratio analysis, faculty usually reward correct formulas first, then sound interpretation, then a clear link to a decision. This paper shows each formula next to three years of results, and the margin notes explain why a trend says more than any single year. Setting the results against national evidence on hospital finances shows analytic depth that graders credit. The section on implications for the program meets the application row, because it changes the size and timing of the request. Limitations show awareness that ratios describe the past. The flow from statements to ratios to meaning to action covers organization. Presentation marks depend on a clean APA table, figures that agree across the paper and a correct citation for the national study.
DNP 840 Module 6 help: mistakes that cost marks
Students often calculate ratios without interpreting them, leaving a table of numbers with no meaning. Say what each trend shows and why it matters. Another common mistake is confusing operating margin with total margin, which includes investment income and can hide weak operations; define both. Papers also judge one year in isolation, so use at least three. Some students forget to connect the analysis to any decision, which is the point of the assignment in a leadership course. Show how the results shape your request. A further gap is ignoring the balance sheet and reporting only income measures. Finally, check your formulas against a reliable source, since small errors in definitions are easy for a grader to spot.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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DNP 840 Module 6 questions, answered
What does DNP 840 Module 6 usually ask for?
Aspen's DNP 840 description includes financial management, so analyzing an organization's financial statements with ratios is a typical assignment. Check your classroom for the prompt and any required ratios.
What is the difference between operating margin and total margin?
Operating margin measures results from the core business of patient care and related operations. Total margin adds nonoperating items such as investment gains, which can hide weakness in operations.
What does days cash on hand measure?
How many days an organization could pay its cash operating expenses from unrestricted cash and investments, a common measure of financial cushion.
Where can I find a free DNP 840 Module 6 sample paper?
This page contains the full financial statement and ratio analysis, with its ratio table, title page, references and margin notes, and you can read it without charge. If you have an organization's statements and a prompt of your own, send them through the request form.
What does days cash on hand show in DNP 840 Module 6?
Days cash on hand counts the days an organization could keep covering operating costs from the cash it holds, with no new revenue. Higher values mean more cushion. This example pairs it with operating margin to show that a system can be liquid while its operations weaken.