Total Margin Ratios In Healthcare

Total margin ratio
It is a tool that measures an organization's overall profitability. It is very simple to calculate by using data that is readily available. It also enables comparison between large and small entities on equal playing grounds. Unfortunately, total margin ratio does not account for debts or investments; limiting its purpose in the analysis of an organization's fiscal health (Tamari, 1978).
Formulae
Total margin ratio = net income/ total revenues
Net income is calculated to be the excess of all revenues after subtracting expenses. We, therefore, need data on total revenues and expenses to calculate margin ratio. Total revenues can be gotten by adding revenues from different sources.
Total Margin Ratio = $8572 / $117,476 = 0.073 = 7.3%
Interpretation
The ratio is high (7.3%, greater than 0) meaning; the health organization has control to its costs and

Monthly financial statements reports are not sufficient to use when making important decisions in the organization. As the business grows, there is a lot of cash usage that require tracking and watching. Using the key operating indicators can save a company great trouble. There exists a wide range of key operating indicators such as; qualitative indicators, quantitative, leading indicators that forecast the outcome of a process. Lagging indicators show the existing success or failure in the organization's performance. Input indicators, on the other hand, quantify the number of consumed resources while generating an outcome. Process indicators, for instance, reflect the effectiveness and productivity of a process. Output indicators show the results of a specific process. Directional indicators give specifications on how better or worse an organization is. Actionable indicators affect the required change and lastly, financial indicators measure the overall business