Working Capital

Alternate Working Capital Policy

Introduction

In evaluating an alternate policy to reduce financial issues in a health care organization is critical. Financial managers must understand every aspect of their finances of incoming and outgoing cash flow daily. In evaluating Elijah Heart Center there are some financial issues to be addressed. Elijah Heart Center is a 140-bed cardiac care hospital based in New York. The finance department has reported growing revenue, but falling profits. In this paper I will explore short-term financing, accounts receivable and inventory, cash conversion, risk factors and performance measures to improve the financial stability in the Elijah Heart Center.

Alternate sources short-term financing

The board of Elijah Heart Center has decided to hire a financial consulting firm to handle the organizations financial issue. Elijah Heart Center needs a short-term fix for the organization’s shortfall. The organizations plan is to modernize and have an expansion plan within a two-year time frame. The current issue is the organization is facing a potential working capital shortfall with not enough cash to sustain itself. Short term financing is common with a repayment plan within 12 months. Financing would be beneficial to Elijah Heart Center with selecting a loan to solve the working capital shortfall. Receiving $2,300,000.00 as payments from Medicare and managed care in three months, which would solve their cash flow issue. This would solve for the short term of three months. Paying the higher interest rate is more beneficial because the loan selection has no prepayment limitation with the loan option number one.

Accounts receivable and inventory affects on Elijah Heart Center

Elijah Heart Center is a 140-bed cardiac care hospital based in New York. The specialty hospital contains a variety of cardiovascular services for cardiovascular patients. The accounts receivable and inventory has affected...