National Association of Boards of Long Term Care Administrator (NAB) CORE Practice Exam

What financial document would provide insights into the cash flow of a healthcare organization?

1. Balance sheet

2. Income statement

3. Cash flow statement

4. Statement of equity

The correct answer is: Cash flow statement

The cash flow statement is the financial document that specifically provides insights into the cash flow of a healthcare organization. This statement details the inflows and outflows of cash, categorizing them into operating, investing, and financing activities. It helps stakeholders understand how well the organization generates cash to meet its obligations, fund its operations, and invest in future growth. In contrast, the balance sheet presents a snapshot of the organization's financial position at a particular point in time, showing assets, liabilities, and equity, but it does not provide direct information about cash flow. The income statement reports revenues and expenses over a period, highlighting profitability but not the actual cash movements. The statement of equity summarizes changes in equity over time, giving insights into ownership and retained earnings, but does not address cash flow directly. Therefore, the cash flow statement is the most relevant document for analyzing cash flow in a healthcare organization.