Finance Research Paper Example | Topics and Well Written Essays - 1000 words

Finance - Research Paper Example Nevertheless, only specific generally accepted accounting principles apply in the health sector where they define how healthcare entities prepare their financial statements (Kramer, 2014). As such, this paper will only address the principle of creditworthiness, disclosing assets and liabilities, establishing financial stability, and bargaining power, which have a direct relationship with health care (Richards, 2014). I will describe each of the named principle, define its intention, and relate it to health care. Creditworthiness is a generally accepted accounting principle that applies in health care. This principle compels accounting officers to compare the reference business with other businesses within the same industry (Richards, 2014). This comparison may relate to the profitability of the business, revenues, operating costs, market position, and assets and liabilities. By comparing the reference business with other businesses in the same industry, this principle seeks to establish the performance of the reference business with respect to the performance of the industry. This helps in determining the credit worthiness of the reference business in comparison with other businesses in the same industry. This principle is applicable in the health sector in that it allows insurance agents and financial institutions that provide services to the health aid business to compare this business with other businesses in the health and medical industry with an aim of establishing its creditworthines s (Richards, 2014). This helps in measuring the financial strength of a business or organization in the health sector. Indeed, this principle helps in comparing the revenues of different companies in the health sector. Through this principle, we can establish the projected revenues in the health sector, which defines creditworthiness. Establishing financial stability is another generally accepted