Critical Thinking on Financial Management

2021-07-05 01:54:47
2 pages
430 words
University/College: 
University of Richmond
Type of paper: 
Critical thinking
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Uses of Financial Statements, Financial Calculations, and Working Capital

These are used for planning revenue and expenditure, thereby allowing to make accurate assumptions in allocating funds to specific purposes in advance (Jain & Khan, (2005). In essence, the financial statements will help highlight the profits that can be used in futuristic planning for investments while financial calculations will be used in justifying the expenditure, as well as showcase the financial health of the organization, which can be used in justifying the expenditures for investing in budgetary allocation. The working capital will help justify the creation of revenue streams using the company assets (Bhattacharya, 2014).

Objective of Managing Cash Flow

The objectives include accelerating cash slows, delaying cash outflows until they are due, investing cash to consequently earn a rate of return, borrowing cash while considering best terms, and maintaining an optimal level of cash that is not deficient or excessive.

Concern about Cash on Hand

Financial leaders are concerned about the cash on hand mainly because the business should always have adequate cash on hand so that they can pay for borrowed and operations funds, as well as make investments (Cui, 2017). Without cash on hand, it would be impossible to run a business. Essentially, insufficient cash on hand has adverse effects on business as the business will not be able to pay for operating expenses, borrowing costs, and capital expenditures.

Factors that Set the Healthcare Industry Apart

Based on the accounts receivables, these factors are the nature of the services that healthcare facilities provide, the cost of the various services that they provide, and lastly, the method of payment for services provided (Medicare and Medicaid).

Effects of Trends within Medicare, Medicaid, and Third-Party Payers

Medicare protects patients against the costs of numerous healthcare services, including healthcare facility stay where the beneficiaries are liable to co-insurance amounts. Medicaid, on the other hand, complements the Medicare program. Its benefits include the fact that it covers all healthcare services at no cost. These affect the working capital by reducing the assets for healthcare facilities because they have to provide healthcare services at subsidized prices or at free, meaning that the working capital will be less before being reimbursed (Jain & Khan, 2005). Besides, the cost elements. Besides, the carrying cost, delinquency cost, and credit and collection cost will increase hence fewer profits and cash at hand (Jain & Khan, 2005).

 

References

Bhattacharya, H. (2014). Working capital management: Strategies and techniques. New York, NY: PHI Learning Pvt. Ltd.

Cui, C. (2017). Cash-on-hand and demand for credit. Empirical Economics, 52(3), 1007-1039.

Jain, P. K., & Khan, M. Y. (2005). Basic financial management. New York, NY: Tata McGraw-Hill.

 

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