Alternate Working Capital Policy

Alternate working capital policy

Elijah Heart Center (EHC) hospital built as an advanced coronary care unit in New York. It has 140 beads and 120, 00 square foot for this specialty. The EHC hospital provide full support of cardiovascular patients including catherization laboratories, nephrology, pulmonology, ancillary equipment for radiology, surgical suites for open-heart surgery and other cardiovascular services. On the other hand, according to University of Phoenix (2011) that the rapid growth in revenues and patients resulting in a drop of profits.

As a finance manager, need to discuss short-term finance to explore solutions. By doing this will need to reexamine accounts receivable, inventories, and cash conversion cycle that would affect the EHC policy and its importance in cash management. In an organization it is very important to discuss risks and how to minimize risk. Nonetheless, as a manager need to expand on how to evaluate recommendations in an organization based on performance levels and measures.

Alternate short-term financing sources

Decreasing EHC’s contracted employee would be effective as one of the strategy to reduce costs that would not affect the revenue. Hiring unlicensed assistive personnel that met the qualification in the position would help the organization to save cost. Also diminishing some EHCs contract personnel would help to reduce cost.

Affects to business policies and working capital management

Accounts receivable, inventories, and cash conversion cycle are aspects of business policies and its importance working capital management. However, purchase of resources, billing, collection, and service would be the factor affects working capital.

Accounts receivable, the service or product must be taken care off at the beginning of working capital management cycle; therefore, the EHC hospital will wait patient payments at the end of the cycle. According to Baker and Baker (2007) that the hospital may require larger financing...