DISCUSSION QUESTION 4-2

MH688 Health CareEconomics and Financial Management

Lesson 4: Financial Statement Development

Upon completion of the Required Readings, write a thorough, well-planned narrative answer to the following discussion question. Rely on your Required Readings and the Lecture and Research Update for specific information to answer the discussion question, but turn to your original thoughts when asked to apply, evaluate, analyze, or synthesize the information. Your Discussion Question response should be both grammatically and mechanically correct, and formatted in the same fashion as the question itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your responses and document in a bibliography using APA style.

Discussion Question 2 (30 points)

Refer to the financial information presented to you and the Statement of Cash Flows you developed in Discussion Question #1 to answer the questions below: (30 points) (A 2-page response is required.)

You are a potential creditor of Blank Memorial Hospital. Discuss three (3) reasons why you would consider extending a line of credit to the hospital. Also, explain at least one (1) concern you might have. Finally, discuss any information that has not been presented to you that you would find useful.

You are a potential investor in Blank Memorial Hospital. Discuss three (3) reasons why you would consider contributing capital to the hospital. Share at least one (1) concern that you might have. Then discuss any additional information you might require.

Blank Memorial Hospital, Statement of Cash Flows
				FY 2004
Cash Flow From Operating Activities:
	Net income			500,600
		Add back depreciation and amoritzation		13,000
Net Income & Non-Cash Transfers				513,600
Adjustments to Working Capital:
	Changes in Current Assets:
		Change in Net Accounts Receivable		-15,000
		Change in Inventories		24,000
		Change in Prepaid Expenses		-12,300
	Changes in Current Liabilities:
		Change in Accounts Payable		9,700
		Change is Accrued Expenses		-12000
Net Cash from Operating Activities				508,000
Cash Flows from investing Activities:
	Capital Expendatures (Change in Gross Fixed			-15,000
		Assets)
Cash Flows from Investing Activities:
	Change in Notes Payable
	Change in Marketable Securities			100,000
	Change in Long-Term Investments			-74,000
	Change in Long-Term Debt			26,000
Net Cash from Financing Activities
Net Change in Cash				519,000
Cash at Begiinning of Year				100,000
Cash at End of Year (Cash Balance)				619,000