Which financial statement explains changes in cash balances for a healthcare entity?

The Statement of Cash Flows is the financial statement that specifically addresses changes in cash balances for a healthcare entity. This statement provides detailed insights into the sources and uses of cash in three main categories: operating activities, investing activities, and financing activities.

In the context of a healthcare entity, the Statement of Cash Flows helps stakeholders understand how cash is generated from patient services, how it is used for capital expenditures, and how financing activities, such as borrowing or capital infusion, affect overall cash position. This is crucial for assessing the liquidity and financial flexibility of the healthcare organization, enabling management and investors to make informed decisions based on cash availability.

Other financial statements serve different purposes. The Income Statement focuses on revenue and expenses over a specific period, reflecting profitability but not providing a direct view of cash flow. The Statement of Changes in Equity outlines changes in the equity portion of the balance sheet, such as retained earnings and issued shares, but does not address cash management. The Balance Sheet presents a snapshot of a healthcare entity's financial position at a specific point in time, showing assets, liabilities, and equity, but it does not demonstrate how those figures change over the period in terms of cash transactions. Thus, the Statement of Cash Flows is essential for compreh