Healthcare Finance

Read Chapters 7 in Reiter & Song (2018)

• 7.3 Define average collection period . How is it used to monitor a firms accounts receivable?
• 7.4 What is an aging schedule? How is it used to monitor a firms accounts receivable?
• 7.5 What is the goal of cash management?
• 7.6 Briefly describe float and why it is a useful cash management concept.
• 7.7
  • a. Give two reasons that businesses hold marketable securities (short-term investments).
  • b. Which types of securities are most suitable to hold as marketable securities?
  • c. Suppose Southwest Regional Medical Center has just raised $6 million in new capital that it plans to use to build three freestanding clinics, one each year over the next three years. (For the sake of simplicity, assume that equal payments have to be made at the end of each of the next three years.) What securities should the firm buy for its firms marketable securities portfolio, assuming that the firm has no other excess cash? (Hint: Consider both the type and maturity of the securities.)
  • d. Now, consider the situation faced by the Huntsville Physical Therapy Group. It has accumulated $20,000 in cash above its target cash balance, and it has no immediate needs for this excess cash. However, the firm may at any time need some or all of the $20,000 to meet unforeseen cash needs. What securities should be bought for the firms marketable securities portfolio?