1. Your firm reduces its days in receivables from 87 to 67, which generates $3.4 million of new investment funds. What will happen to the growth rate in equity? Why will this happen? You do not have to calculate any number just talk about what will happen to the income statement and/or balance sheet.
2. Your firm has $45.0 million invested in accounts receivable, which is 90 days of net revenues. If this value could be reduced to 50 days, what annual increase in income would your firm realize if the increase in cash could be invested at 7.5 percent?
3. Revenues increased by 30 percent in your firm during the past year while total assets increased only 5 percent and equity financing ratios remained constant at 50 percent. Return on equity remained constant at 12 percent. Why didnt return on equity increase? You do not have to calculate any number just think and talk about what will happen to the ratios. It may be helpful to look at the formulas
4. What are some of the ways a for-profit healthcare firm can increase its equity?