19/1/14 UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Chapter 15- Revenue Cycle and Current Accounts Management Mini-Case Rich Jacksln, a recent MHA graduate, has been hired by Tarheel Rehabilitation Clinic to manage a new prosthetic/orthotic supply division of the company. The division would sell primarily to rehab 9 patients, some of whom pay for the devices themselves and some of whom have the bill paid by a third 0 party insurer. Sales would be slow during the first few months, rise during the middle of the year, 1and then level off by the end of the year. Sales estimates for the first year of operation are shown in 2 the table below (in thousands of dollars). Rich estimates that 30 percent of the division's customers 3 will pay in the month of sale, 50 percent will pay in the month following sale, and the remaining 20 4 percent will pay in the second month following the sale. Calculate the division's expected: 5Accounts receivables (A/R) at the end of each month 6Total sales for each quarter of operation 7Average daily sales (ADS) for each quarter of operation 8Average collection period (ACP) for each quarter of operation - Aging schedules for the end of each quarter 1ANSWER 2 3 Assumed collection pattern 4 Month of sale 5 One month after sale 6 Two months after sale 7 Remaining 0% 0% Collected 0% Monthly Report Quarterly Report Sales 9 Month 0 Januar Sales $100 $200 $300 $400 $500 $600 $675 $725 $750 $750 $750 $750 ADS ACP Februa 2 March 3 April $0 31 $0.00 31 5 June 6 Jul 7 August 8 September 9 October $0.00 S0 31 S0.00 November 1 December S0.00 End of March AJR % End of June 4 Age of account 5 0-30 days 6 30-60 days 7 60-90 days 8 Total 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% End of September End of December Age of account 2 0-30 days 3 30-60 days 4 60-90 days 5 Total 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% S0 S0 7