Question: What are the advantages and disadvantages of short- and long-term borrowing to meet working capital needs.

Answer:Under normal conditions health care facilities can usually achieve higher earnings (lower interest costs) through short-term debt but will do so at an increased risk of being unable to meet higher debt payments. On the other hand, facilities borrowing long-term to support working capital, lower their earnings (increased interest costs) but reduce the risk through lower debt payments.

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