Leasing Equipment Effect On Financial Analysis Free Essay

Introduction

Leasing equipment instead of buying it is a factor that affects depreciation charges, inventory costs, and firm value overall. Thus, it can significantly affect the analysis ratios used to compare two different firms or the same company at a different time. Usually, start-up companies and businesses with strictly limited budgets would consider leasing equipment instead of buying it; however, other factors may also influence this decision.

Reasons for Leasing

Sometimes firms do not have the necessary resources to buy all the equipment or materials to run their business, so they rent what they need to start operating. Also, in some cases, small businesses need to preserve cash, and leasing is a flexible option to make that happen (Cotei & Farhat, 2017). Large and well-established firms are usually less likely to rent equipment and materials, although the net profits may not show any correlation between the firms buying all they need and opting for a lease.

What Ratios May Be Affected

Any financial ratio that includes assets will be affected by a firm’s decision to lease equipment. Buying it would make a company go through a one-time sunk cost, and renting it would require multiple transactions that do not end quickly. So, in the short run, any firm that spends a large sum to obtain something needed for production may look worse off financially than the one with a lease agreement. In the long run, the situation may change radically, as the first company will no longer spend money on this asset, while the second one may end up paying multiple times the cost of it. On top of that, amortization and inflation also play their part, making such measurements as the total and fixed assets turnover ratios somewhat inaccurate when comparing two such firms (Brigham & Ehrhardt, 2020). Depending on the chosen time, one of them may appear to possess more or fewer assets than in reality.

Liquidity ratios will also be affected, as when leasing whatever they need, the firm will have more cash starting the first months but no opportunity to turn the equipment into cash. On the other hand, buying assets in many cases leave a possibility to sell them for cash when needed. Both the current and quick ratios include inventory, which is a part of assets at that time (Brigham & Ehrhardt, 2020). Comparing the firms, one of which leases the equipment and another one that does not, maybe misleading when looking at the liquidity.

Response to a Post by Tiarra MM

In the post, the author summarizes the concepts of profitability, asset management, and market value ratios. Since the profitability ratio shows the difference between revenue and cost of goods sold, it can be used as a fundamental way to measure the firm’s state. However, it is not a detailed analysis to understand if the company is using its full potential. Asset management shows how efficiently the business uses its assets, but its accuracy depends on what precisely the company possesses and how it is documented. The author also mentions the importance of using the ratio in comparing it to firms within the same industry for better results. I agree that since different business spheres use their specific logistics and operations, comparing them through financial ratios may be misleading.

Response to a Post by Amber

The author talks about the three methods of analysis: ratio, horizontal, and vertical. One of the post’s points is the necessity of considering quantitative factors, such as the environment, political threats, and economic risks. In my opinion, financial analysts would be correct to treat the state of each as a complex issue, affected by multiple internal and external factors. The numbers and ratios may provide statistics and a general idea about the business but should not be used as the only source to make conclusions.

References

Brigham, E. & Ehrhard, M. (2020). Financial management: theory & practice (16th ed.). Cengage.

Cotei, C. & Farhat, J. (2017). The leasing decisions of startup firms. Review of Pacific Basin Financial Markets and Policies, 20(4), 1-30. Web.

Literature And Case Analysis Of Defamation

Current article

The name of the article is called “The Cooks, The Critics, The Restaurant Proprietor, And Their Court Cases.” The article was written by Noric Dilanchian on Tuesday, 20 July 2010 in Sydney Morning Herald Newspaper. It was a case that ruled that defamation can occur even when the case concerned reviews are found in electronic or other forms. The case included the restaurant proprietors’ cooks and their critics. The reason for the ruling is that despite the way the defaming information is spread, there is a danger that it causes and thus damage is caused on the complainant.

The article is based on a business fact that is in the increase in today’s business world which is highly influenced by the use of a computer. Generally, by the mention of defamation what comes to one’s mind is a person case, but the case takes a different angle. As we progress to start a course in business law, this will be a relevant case that has opened my mind (Noric 1-3).

Related case

John Fairfax Publications Pty Ltd and Matthew Evans v Aleksandra Gacic, Ljiljana Gacic, and Branislav Ciric

Both the cases are of the opinion that in case of defamation then the complainant has the legal right to sue. This has been extended to business cases just the same way they are in human beings. In the earlier case, there was no electronic defamation, but the issue is brought in the second case. The earlier was on a publication, it had been decided on 14TH June 2007 by Malcolm Brown (High Court of Australia 1).

The case was decided by three judges namely Justices Gleeson, Michael Kirby, and Crennan.

Related Statute

Statutory Rules 1998 No. 162 as amended made under the Trade Practices Act 1974. The above case portrays a way of conducting business that is not ethical. This contravenes Statutory Rules 1998 No. 162 as amended made under the Trade Practices Act 1974 requires even and proper business practices.

Works cited

High Court of Australia. John Fairfax publications Pty ltd and Matthew Evans v Aleksandra Gacic, Ljiljana Gacic and Branislav Ciric. 2007. Web.

Trade Practices (Industry Codes —Franchising) Regulations 1998 Statutory Rules 1998 No. 162 as amended made under the Trade Practices Act 1974. Web.

Noric Dilanchian. “The cooks, the critics, the restaurant proprietors and their court cases”. Sydney Morning Herald. Tues. 2010. Web.

Medication Error: Root-Cause Analysis And Safety Improvement Plan

Nowadays, patient safety still requires continuous improvements that are based on evidence and lead to the elimination of health care system deficiencies. The sentinel events that will be analyzed are medication errors taking place at Clarion Court, Minnesota. This patient safety problem has been deteriorating for six months what seen more and more medication incidents. The last incident showed that the situation had gone too far, and countermeasures are welcomed. This paper is designed to identify the root causes of a high medication error rate. It also will discuss evidence-based methods to mitigate medication errors and present a safety improvement plan designed to avoid this issue from occurring again.

Analysis of the Root Cause

The main issues that health care professionals faced at Clarion Court in Shakopee, MN, were medication errors. According to Whittaker et al. (2018), medication errors cause from 7000 to 9000 deaths annually in the US. Adverse drug events can occur at different patient care levels, including prescribing, documenting, transcribing, dispensing, administering, and monitoring (Da Silva & Krishnamurthy, 2016). Although facility staff was usually blamed in such cases, now medication errors are seen as a multisystem fallout that can be perfectly demonstrated by the Swiss Cheese Model. Its common causes are distortions, distractions, illegible writing, and mistakes in drug calculation that are usually triggered by personnel tiredness due to high workload.

In the case of Clarion Court, the serious sentinel event regarding medication took place recently and almost ended in a patient’s death due to overdose. Stephen Silva, the administrator of the hospital, instructed the charge nurse to research the issue to find the root causes and create a safety improvement plan to prevent that medication error recurrence. The charge nurse conducted interviews with colleagues that assisted in collecting needed evidence to define the reasons behind occurred errors. This issue has an adverse effect on the patients’ safety of Clarion Court that encompasses missed medication, wrong route, wrong patients, double dosing, and some other system deficiencies that can lead to it.

Registered nurses (RN) were found to criticize the certified nursing assistants (CNAs) for allegedly not following procedures and often shortcutting. Another RN representative was concerned with too sophisticated safety training that is difficult to implement in practice. The CNAs suffer from a lack of experience, mainly due to very high employee turnover. Another voiced problem is inferior communication between nurses and CNAs that causes misunderstanding and lack of trust.

The cultural differences were also spotted to influence the interactions of practitioners during shift changeovers. Hence, the lack of language skills leads to errors caused by communication mistakes. The interviews also revealed that CNAs and nurses have a hard job, have too long shifts, and face difficulties using a complicated computer system. All these factors see staff tired and more error-prone following several hours of work. This evidence makes it possible to define the root causes of medication errors, which include disturbances, lack of experienced staff, and regular cognitive overload. Nurses are more error-prone and sidetracked during their shifts because they are overworked and understaffed.

Improvement Plan with Evidence-Based and Best-Practice Strategies

The evidence-based safety improvement plan is essential to implement successful change within the facility. CNA’s lack of expertise and motivation can be addressed with a team empowerment strategy. A more active and conscious approach to policies from the staff instead of shortcutting will improve overall patient safety level and service quality. Team members should feel that others value their roles. It will contribute to better collaboration and enhanced patient outcomes. However, such change is not possible without a proper leader that encourages practitioners to do their best. For instance, if the RNs and physicians treat the certified nursing assistants as equals, the latter would abandon shortcutting and perform their duties precisely and promptly, allowing nurses to care only about their tasks.

Communication plays an essential role in fostering the new policy. Such principle-based training as CRM and TeamSTEPPS can be applied to enhance patient safety and teamwork at Clarion Court. According to Buljac-Samardzic (2020), such types of training include lectures, videos, simulations, role-playing, and other management methods that aimed to prevent errors by avoiding them and mitigating their consequences. The best choice would be a program that combines principle-based training (CRM), briefing checklists, and simulation-based training as it proved to be promising for fostering team functioning (Buljac-Samardzic, 2020). The improvement plan also incorporates such National Patient Safety Goals as “use at least two patient or resident identifiers when providing care, treatment, and services” and “report critical results of tests and diagnostic procedures on a timely basis” (Joint Commission, 2020, p. 2). These elements of strategy help to improve the communication of caregivers, especially during the prescription and administering stages.

Another problem that is fatigue due to high overload can be addressed by personnel increase in hospital. There is a lack of professionals that makes the hospital’s authorities exploit the staff who eventually feel continuous cognitive overload. Gorgich et al. (2016) reveal that the limited number of personnel reduces the quality of work and is the principal cause of medication errors. Thus, the employment of more nurses within two months is required by the new improvement plan. Moreover, such technologies as clinical communication and collaboration (CC&C) platforms are welcomed to be installed in Clarion Court as they have the potential to reduce cognitive load and enhance collaboration. Together with electronic medication cards, this technology mitigates team miscommunication caused by cultural differences.

The last but not least root cause that should be addressed is a continuous distraction at the workplace. In this case, some environmental adjustments as “Do Not Disturb Policy” should be done. Special signs on med carts that information about a nurse’s involvement in medication will allegedly lower the chance of him/her being distracted from the process by co-workers, patients, and family members. It, in turn, lowers the likelihood of making a typical error. For instance, the nurse can prepare medication, whereas the CNA can deal with the patient’s request for restroom assistance instead. Other adjustments include “Two Hour Rounding” and “No Pass Zone” strategies that help to minimize alarm noises and increase response time. As a result, the administration of medications will not be interrupted by excessive noise, while the nurse will be able to stay focused for a longer period.

Existing Organizational Resources

Clarion Court has some experienced CNAs and licensed practical nurses that could take a burden of leadership to drive the change within the facility. However, the majority of them do not trust in the practical implementation of methods they learned during safety training. The hospital is equipped with a computer system that is used for charts. It can be a benefit as software improvement is the only thing that is needed to establish a more advanced system such as Computerized Physician Order Entry (CPOE) or Clinical Decision Support System (CDSS). It can be useful in minimizing medication errors and verbal orders, improving the legibility of prescriptions, and standardizing the order. More health care professionals should be hired, and more training tools acquired to improve the implementation of the plan.

References

Buljac-Samardzic, M., Doekhie, K. D., & van Wijngaarden, J. D. (2020). Interventions to improve team effectiveness within health care: A systematic review of the past decade. Human Resources for Health, 18(1), 1-42.

Da Silva, B. A., & Krishnamurthy, M. (2016). The alarming reality of medication error: A patient case and review of Pennsylvania and National data. Journal of Community Hospital Internal Medicine Perspectives, 6(4), 31758.

Gorgich, E. A. C., Barfroshan, S., Ghoreishi, G., & Yaghoobi, M. (2016). Investigating the causes of medication errors and strategies to prevention of them from nurses and nursing student viewpoint. Global Journal of Health Science, 8(8), 220.

Joint Commission. (2020). Hospital: 2020 national patient safety goals. Web.

Whittaker, C. F., Miklich, M. A., Patel, R. S., & Fink, J. C. (2018). Medication safety principles and practice in CKD. Clinical Journal of the American Society of Nephrology, 13(11), 1738-1746.

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