Question.2586 - For a health care organization to survive and grow, it requires capital. Effective capital management is vital for the business to function, especially in health care sectors that exist with such narrow profit margins. Your business operations skill is important to be able to identify risks associated with various financing options for capital projects that fund growth, purchase equipment, and build new facilities.Preparing for the Assignment Create this assignment using Microsoft PowerPoint . Assignment Directions Create a 12- to 15-slide presentation with detailed speaker notes in which you: • Evaluate effective working capital-management techniques. • Evaluate alternative capital projects. • Analyze risks associated with capital projects. • Describe the decision-making factors in lease versus buy. • Describe the effect of financing strategies on the cost of capital. • Describe the benefits and risks of debt financing. Incorporate appropriate use of images or other multimedia in your presentation. Cite any sources, images, and multimedia included in your presentation. Format your references according to APA guidelines. Submit your assignment. Resources • Center for Writing Excellence (https://multimedia.phoenix.edu/cms/cwe/) • Reference and Citation Generator (https://multimedia.phoenix.edu/cms/citation) • Grammar Assistance (https://multimedia.phoenix.edu/cms/202010168/)
Answer Below:
Slide x Effective xxxxxxx Management xxxxxxxxx capital xxxxxxxxxx involves xxxxxxxx a xxxxxxx s xxxxxxxxx resources xx a xxx that xxxxxxxxx profits xxx ensures xxxxxxxxx stability xxxx can xxxxxxx various xxxxxxxxxx such xx optimizing xxxx flow xxxxxxxx costs xxxxxxxx debt xxx investing xxxxxx One xxxxxxxxx aspect xx effective xxxxxxx management xx cash xxxx management xxxx involves xxxxxxxxxxx and xxxxxxxxxx cash xxxxx to xxxxxx that xxx company xxx enough xxxxxxxxx to xxxxx its xxxxxxxx and xxxxxxxxxxx It xxxx involves xxxxxxxx working xxxxxxx which xxxxxx to xxx company x current xxxxxx minus xxx current xxxxxxxxxxx By xxxxxxxx working xxxxxxx effectively xxxxxxxxx can xxxxxxxx their xxxx flow xxx reduce xxx need xxx outside xxxxxxxxx Another xxxxxxxxx aspect xx effective xxxxxxx management xx cost xxxxxxxxxx This xxxxxxxx identifying xxxxx where xxx company xxx reduce xxxxx without xxxxxxxxxxx quality xx productivity xxxx management xxx involve xxxxxxxxxxx with xxxxxxxxx to xxx better xxxxxx improving xxxxxxxxxxx efficiency xxx reducing xxxxxxxx expenses xxxxxxx effective xxxxxxx management xxxxxxxx careful xxxxxxxx analysis xxx execution xx ensure xxxx a xxxxxxx s xxxxxxxxx resources xxx being xxxx to xxxxx fullest xxxxxxxxx Slide xxxxxxxxx effective xxxxxxx capital-management xxxxxxxxxx E xxxxxxxxx working xxxxxxx management xxxxxxxxxx involve xxxxxxxx liquidity xxxx flow xxx short- xxxx assets xxx liabilities xx a xxx that xxxxxxxxx profitability xxx financial xxxxxxxxx Some xxx techniques xxx effective xxxxxxx capital xxxxxxxxxx include xxxx flow xxxxxxxxxx and xxxxxxxxxxx Companies xxxx to xxxxxxx their xxxx inflows xxx outflows xxxxxxxxx to xxxxxx that xxxx have xxxxxx liquidity xx cover xxxxx short-term xxxxxxxx and xxxxxxxxxxx By xxxxxxxxxxx their xxxx flows xxxxxxxxx can xxxxxxxxxx potential xxxxxxxxxx and xxxx steps xx address xxxx before xxxx become xxxxxxxx Inventory xxxxxxxxxx Managing xxxxxxxxx levels xx crucial xxx effective xxxxxxx capital xxxxxxxxxx Companies xxxx to xxxxxxx the xxxxx of xxxxxxxx excess xxxxxxxxx against xxx risks xx stock xxxx and xxxx sales xx optimizing xxxxxxxxx levels xxxxx techniques xxxx as xxxxxxxx time xxxxxxxxx management xxxxxxxxx can xxxxxx inventory xxxxx while xxxxx ensuring xxxx they xxxx enough xxxxxxxxx to xxxx customer xxxxxx Accounts xxxxxxxxxx management xxxxxxxxx need xx manage xxxxx accounts xxxxxxxxxx effectively xx avoid xxxx flow xxxxxxxx caused xx late xxxxxxxx or xxx debts xxxx can xxxxxxx setting xxxxx payment xxxxx offering xxxxxxxxxx for xxxxx payment xxx using xxxxxx scoring xx assess xxx creditworthiness xx customers xxxxxxxx payable xxxxxxxxxx Managing xxxxxxxx payable xx also xxxxxxxxx for xxxxxxxxx working xxxxxxx management xxxxxxxxx need xx negotiate xxxxxxxxx payment xxxxx with xxxxxxxxx to xxxxxxxx their xxxx flow xxxxx also xxxxxxxxxxx good xxxxxxxxxxxxx with xxxxxxxxx Slide x Evaluate xxxxxxxxxxx capital xxxxxxxx Evaluating xxxxxxxxxxx capital xxxxxxxx involves xxxxxxxxx the xxxxxxxxx risks xxx rewards xx different xxxxxxxxxx opportunities xx determine xxxxx ones xxx most xxxxxx to xxxxxxxx the xxxxxxxx return xx investment xxxx key xxxxxxx to xxxxxxxx when xxxxxxxxxx alternative xxxxxxx projects xxxxxxx Project xxxx The xxxxx cost xx a xxxxxxx project xx an xxxxxxxxx factor xx consider xx it xxxx impact xxx overall xxxxxxxxxxxxx of xxx project xxxx includes xxxx direct xxxxx such xx equipment xxx labor xx well xx indirect xxxxx such xx financing xxx overhead xxxxxxxx Project xxxxxxxx The xxxx it xxxxx to xxxxxxxx a xxxxxxx project xx also xxxxxxxxx to xxxxxxxx as xx will xxxxxx the xxxx flows xxxxxxxxx by xxx project xxxxxx projects xxx require xxxx upfront xxxxxxxxxx and xxxx longer xx generate xxxxxxx while xxxxxxx projects xxx have xxxxxx profit xxxxxxx but xxxxx overall xxxxxxx Potential xxxxxxx The xxxxxxxxx revenue xxxxxxxxx by x capital xxxxxxx should xx carefully xxxxxxxx to xxxxxxxxx whether xx is xxxxxxxxxx to xxxxxxx the xxxxxxxxxx This xxx involve xxxxxxxxxxx demand xxx the xxxxxxx or xxxxxxx analyzing xxxxxx trends xxx projecting xxxxx growth xxxx time xxxxx and xxxxxxxxxxxxx All xxxxxxx projects xxxxxxx some xxxxx of xxxx whether xxxx factors xxxx as xxxxxxxxxxx regulatory xxxxxxx or xxxxxxxxxxxxx obsolescence xxxxxxxxxx the xxxxxxxxx risks xxx uncertainties xxxxxxxxxx with x project xx critical xx determining xxx overall xxxxxxxxx Strategic xxx Finally xx s xxxxxxxxx to xxxxxxxx how x capital xxxxxxx fits xxxx the xxxxxxx s xxxxxxx strategic xxxxx and xxxxxxxxxx Projects xxxx align xxxx the xxxxxxx s xxxx competencies xxx long-term xxxxxx are xxxx likely xx generate xxxxxxxxx profitability xxx contribute xx overall xxxxxxxx success xx carefully xxxxxxxxxx these xxx other xxxxxxx companies xxx identify xxx alternative xxxxxxx projects xxxx are xxxx likely xx generate xxx greatest xxxxxxx on xxxxxxxxxx align xxxx their xxxxxxxxx goals xxx contribute xx long-term xxxxxxxx success xxxxx -Analyze xxxxx associated xxxx capital xxxxxxxx Capital xxxxxxxx can xxxxxxx various xxxxx that xxx impact xxxxx profitability xxx success xxxx of xxx most xxxxxx risks xxxxxxxxxx with xxxxxxx projects xxxxxxx Cost xxxxxxxx Capital xxxxxxxx can xx expensive xxx unexpected xxxxxxxxx in xxxxxxx costs xxx eat xxxx profits xx even xxxx to xxxxxx Factors xxxx can xxxxxxxxxx to xxxx overruns xxxxxxx delays xxxxxx changes xxx unexpected xxxxxx that xxxxx during xxxxxxxxxxxx Schedule xxxxxx Delays xx completing x capital xxxxxxx can xxxx impact xxx profitability xx they xxx cause xxxxxxx to xx delayed xx lost xxxxxxxx Delays xxx be xxxxxx by x variety xx factors xxxxxxxxx weather xxxxx shortages xxx supply xxxxx disruptions xxxxxxx issues xx a xxxxxxx project xxxx not xxxx quality xxxxxxxxx it xxx need xx be xxxxxx or xxxxxxxx which xxx be xxxxxx and xxxxxxxxxxxxxx Poor xxxxxxx can xxxx negatively xxxxxx the xxxxxxxxxx of xxx company xxx reduce xxxxxxxx satisfaction xxxxxx conditions xxxxxxx in xxxxxx conditions xxxx as xxxxxx in xxxxxx or xxxxxxxxx competition xxx impact xxx profitability xx a xxxxxxx project xxxxx -LeasingL xxxxxx is x common xxxxxx of xxxxxxxxx capital xxxxxx such xx equipment xxxxxxxx and xxxx estate xxxxx a xxxxx agreement xxx lessee xxx user xx the xxxxx makes xxxxxxx payments xx the xxxxxx the xxxxx of xxx asset xx exchange xxx the xxxxx to xxx the xxxxx for x defined xxxxxx of xxxx Overall xxxxxxx can xx a xxxxxx financing xxxxxx for xxxxxxxxx that xxxx to xxxxxxx capital xxxxxx but xxxxxx to xxxxxxxx their xxxx reserves xx maintain xxxxxxxxxxx However xx s xxxxxxxxx to xxxxxxxxx consider xxx costs xxx benefits xx leasing xxxxxx purchasing xx asset xxxxxxxx and xx negotiate xxxxx terms xxxx meet xxx specific xxxxx of xxx business xxxxx -Advantages xxx Disadvantages xx Leasing xxxx of xxx advantages xx leasing xxxxxxx Lower xxxxxxx costs xxxxxxx allows xxxxxxxxx to xxxxxxx assets xxxx minimal xxxxxxx costs xx they xxxxxxxxx require xxxx a xxxxx down xxxxxxx or xxxxxxxx deposit xxxxxxxx cash xxxx Leasing xxx improve xxxx flow xx spreading xxx the xxxx of xx asset xxxx time xxxxxx than xxxxxxxxx a xxxxx up-front xxxxxxxxxx Flexibility xxxxxxx agreements xxx be xxxxxxxxxx to xxxx the xxxxxxxx needs xx the xxxxxx with xxxxxxx for xxxxxxx lease xxxxx and xxxxxxxxxxxx options xxx benefits xxxxxxxxx on xxx structure xx the xxxxx agreement xxxxx payments xxx be xxxx deductible xx an xxxxxxxxx expense xxxxxxx risk xxxxxxx can xxxxxx the xxxx of xxxxx obsolescence xx the xxxxxx can xxxxxxx to xxxxx equipment xx the xxx of xxx lease xxxx without xxxxxx to xxxx the xxxx cost xx replacement xxxxxxx there xxx also xxxx potential xxxxxxxxx to xxxxxxx including xxxxxx overall xxxxx Over xxx long xxxx leasing xxx be xxxx expensive xxxx purchasing xx asset xxxxxxxx as xxx lessee xxxx continue xx make xxxxx payments xxx the xxxxxxxx of xxx lease xxxx Limited xxxxxxx Because xxx lessor xxxxxxx ownership xx the xxxxx the xxxxxx may xxxx limited xxxxxxx over xxx it xx used xxx maintained xxxxxxxxxxxx on xxx Lease xxxxxxxxxx may xxxxxxx restrictions xx how xxx asset xxx be xxxx or xxxxxxxx which xxxxx limit xxx lessee x flexibility xxxxxxxxxxxx obligations xx the xxx of xxx lease xxxx the xxxxxx may xx required xx return xxx asset xx good xxxxxxxxx and xxx any xxxxxxxxx fees xx penalties xxxxxxxxx in xxx lease xxxxxxxxx Slide x Describe xxx decision-making xxxxxxx in xxxxx versus xxx When xxxxxxxx whether xx lease xx buy xx asset xxxxxxxxx must xxxxxxxx a xxxxxxx of xxxxxxx to xxxxxxxxx which xxxxxx is xxxx beneficial xxxx key xxxxxxxxxxxxxxx factors xxxxxxx Upfront xxxxx Purchasing xx asset xxxxxxxx typically xxxxxxxx a xxxxxx upfront xxxxxxxxxx than xxxxxxx which xxx impact xxxx flow xxx the xxxxxxx to xxxxxx other xxxxxxxxxx opportunities xxxxxxxxx costs xxxx the xxxx term xxxxxxx can xx more xxxxxxxxx than xxxxxxxxxx an xxxxx outright xxx to xxxxxxx lease xxxxxxxx while xxxxxx an xxxxx outright xxx require xxxxxxxxxx expenses xxxx as xxxxxxxxxxx and xxxxxx costs xxxxx lifespan xxx expected xxxxxxxx of xxx asset xxx also xxxxxx the xxxxxxxx to xxxxx or xxx If xxx asset xx likely xx become xxxxxxxx or xxxxxxx replacement xx the xxxx future xxxxxxx may xx a xxxx cost-effective xxxxxx Flexibility xxxxxxx can xxxxx more xxxxxxxxxxx in xxxxx of xxxxxxxxx to xxxxx assets xx the xxx of xxx lease xxxx while xxxxxx an xxxxx outright xxxxxxxx more xxxxxxx over xxx the xxxxx is xxxx and xxxxxxxxxx Tax xxxxxxxxxxxx The xxx implications xx leasing xxxxxx buying xx asset xxxxxx also xx considered xxxxxxxxx potential xxx deductions xxx leasing xxxxxxxx Creditworthiness xxxxxxx may xx a xxxx attractive xxxxxx for xxxxxxxxx with xxxxxxx creditworthiness xx who xxx unable xx secure xxxxxxxxx for x large xxxxxxxx purchase xxxxxxxxxxx cost xxxxxxxxx must xxxx consider xxx opportunity xxxx of xxxxxxx versus xxxxxx an xxxxx including xxx potential xxxxxxx on xxxxxxxxxx that xxxxx be xxxxxxxx by xxxxx the xxxxx for xxxxx purposes xxxxxxxxxx the xxxxxxxx to xxxxx or xxx an xxxxx will xxxxxx on xxx specific xxxxx and xxxxxxxxxxxxx of xxx company xx carefully xxxxxxxxxxx these xxx other xxxxxxx companies xxx make xxxxxxxx decisions xxx choose xxx financing xxxxxx that xxxx aligns xxxx their xxxxxxxx goals xxx financial xxxxxxxxxx Slide x Cost xx Capital xxx cost xx capital xx the xxxx of xxxxxx that x company xxxx earn xx its xxxxxxxxxxx to xxxxxxx its xxxxxxxxx and xxxxxxxx their xxxxxxxxxx in xxx business xx represents xxx minimum xxxxxx of xxxxxx that x company xxxx achieve xx its xxxxxxxxxx projects xx justify xxx use xx its xxxxx The xxxx of xxxxxxx is xxxxxxxxx calculated xx a xxxxxxxx average xx the xxxx of xxxx and xxx cost xx equity xxx cost xx debt xxxxxx to xxx interest xxxx that x company xxxx on xxx outstanding xxxx while xxx cost xx equity xxxxxxxx the xxxxxxxx rate xx return xxxx investors xxxxxx on xxxxx investment xx the xxxxxxx s xxxxx To xxxxxxxxx the xxxxxxxx average xxxx of xxxxxxx WACC xxxxxxxxx must xxxxx determine xxx proportion xx their xxxxxxx structure xxxx consists xx debt xxx equity xxxx can xxxx calculate xxx cost xx each xxxxxxxxx by xxxxxxxxx the xxxxxxxx rates xx dividends xxxx to xxxxxxxxx and xxx risk xxxxxxxxxx with xxxx component xxxxxxx the xxxxxxxx average xxxx of xxxxxxx is xxxxxxxxxx by xxxxxxxxxxx the xxxx of xxxx component xx its xxxxxxxxxxxx weight xx the xxxxxxx structure xxx cost xx capital xx an xxxxxxxxx metric xxx businesses xx it xxxxx guide xxxxxxxxxx decisions xxx ensures xxxx companies xxx earning xxxxxxxxxx returns xx their xxxxxxxx capital xx a xxxxxxx s xxxx of xxxxxxx is xxxxxx than xxx expected xxxxxx on xx investment xxxxxxx it xxx not xx a xxxx use xx the xxxxxxx s xxxxxxxxx as xx will xxxx to xxxxxxxx sufficient xxxxxxx to xxxxxxx the xxxxxxxxxx Conversely xx a xxxxxxx s xxxx of xxxxxxx is xxxxx than xxx expected xxxxxx on xx investment xxxxxxx it xxx be x good xxxxxxxxxx opportunity xx it xxx the xxxxxxxxx to xxxxxxxx a xxxxxxx return xx investment xxxxx - xxxxxxxx the xxxxxx of xxxxxxxxx strategies xx the xxxx of xxxxxxx Financing xxxxxxxxxx can xxxx a xxxxxxxxxxx impact xx a xxxxxxx s xxxx of xxxxxxx By xxxxxxxx the xxx of xxxx and xxxxxx in xxx company x capital xxxxxxxxx companies xxx influence xxxxx overall xxxx of xxxxxxx and xxx returns xxxxxxxx by xxxxxxxxx Some xxxx in xxxxx financing xxxxxxxxxx can xxxxxx the xxxx of xxxxxxx include xxxxxxxxxx or xxxxxxxxxx the xxxxxxxxxx of xxxx Debt xx generally xxxx expensive xxxx equity xxxxxxx interest xxxxxxxx on xxxx are xxxxxxxxxxxxxx and xxxxxxx demand x lower xxxx of xxxxxx than xxxxxx investors xxxxxxx increasing xxx proportion xx debt xx the xxxxxxx structure xxxx increases xxxxxxxxx risk xxx thus xxx increase xxx company x cost xx capital xx the xxxxx hand xxxxxxxxxx the xxxxxxxxxx of xxxx may xxxxx financial xxxx but xxxxxxxx the xxxx of xxxxxx thus xxxxxxx the xxxxxxx cost xx capital xxxxxxxx the xxxxx of xxxxxxxx Companies xxx also xxxxx their xxxxx of xxxxxxxx which xxxxxx to xxx amount xx debt xxxx to xxxxxxx their xxxxxxxxxx Higher xxxxxx of xxxxxxxx can xxxxxxxx higher xxxxxxx on xxxxxx but xxxx also xxxxxxxx financial xxxx and xxx require x higher xxxx of xxxxxx Lower xxxxxx of xxxxxxxx can xxxxxx financial xxxx but xxx also xxxxxx returns xx equity xxx result xx a xxxxxx cost xx equity xxxxxxx new xxxxxx When x company xxxxxx new xxxxxx it xxxxxxx the xxxxxxxxx interest xx existing xxxxxxxxxxxx and xxx lead xx a xxxxxx required xxxx of xxxxxx from xxxxxxxxx This xxx increase xxx cost xx equity xxx raise xxx overall xxxx of xxxxxxx Using xxxxxxxxx instruments xxxxxxxxx can xxxx use xxxxxxxxx instruments xxxx as xxxxxxxxxxx bonds xx warrants xx raise xxxxxxx These xxxxxxxxxxx may xxxxx lower xxxxxxxx rates xx greater xxxxxxxxxxx but xxxx may xxxx increase xxxxxxxxx risk xxx result xx a xxxxxx cost xx capital xxxxxxx financing xxxxxxxxxx can xxxx a xxxxxxxxxxx impact xx a xxxxxxx s xxxx of xxxxxxx Companies xxxx carefully xxxxxxxx the xxxxxxxxxx between xxxxxxxxx financing xxxxxxx and xxxxxxxxx the xxxxxxx mix xx debt xxx equity xx achieve xxxxx financial xxxxxxxxxx while xxxxxxxxxx their xxxxxxx cost xx capital xxxxx -Benefits xx Debt xxxxxxxxx Benefits xxxxx cost xx capital xxxx is xxxxxxxxx cheaper xxxx equity xxxxx lenders xxxxxxx lower xxxxxxx compared xx equity xxxxxxxxx This xxx help xxxxxx the xxxxxxx cost xx capital xxx increase xxx company x profitability xxxxxxxx payments xxx tax-deductible xxxxxxxxx can xxxxxx interest xxxxxxxx on xxxxx taxes xxxxx reduces xxxxx taxable xxxxxx and xxx lower xxxxx overall xxx liability xxxxxxx retained xx shareholders xxxxxx equity xxxxxxxxx debt xxxxxxxxx does xxx dilute xxxxxxxxx or xxxxxxx of xxx company xxxxxxxxxxxx retain xxxx ownership xxx decision-making xxxxx over xxx business xxxxx repayment xxxxxxxx Debt xxxxxxxxx involves x fixed xxxxxxxxx schedule xxxxx makes xx easier xxx companies xx plan xxx manage xxxxx cash xxxx Potential xxx increased xxxxxxxx Debt xxxxxxxxx can xxxxxx companies xx access x greater xxxxxx of xxxxxxx than xxxx could xxxxx through xxxxxx financing xxxxx which xxx be xxxxxx for xxxxxxx large-scale xxxxxxxx or xxxxxxxxxx Slide xxxxx of xxxx Financing xxxxx Interest xxxxxxxx must xx made xxxxxxxxxx of xxxxxxx performance xxxxxx equity xxxxxxxxx where xxxxxxxxx share xx the xxxxxxx and xxxxxx of xxx company xxxx financing xxxxxxxx regular xxxxxxxx payments xx be xxxx regardless xx the xxxxxxx s xxxxxxxxx performance xxxxxxxxx financial xxxx Taking xx too xxxx debt xxx increase x company x financial xxxx making xx more xxxxxxxxxx to xxxxxxxx downturns xx changes xx market xxxxxxxxxx Negative xxxxxx on xxxxxx rating xx a xxxxxxx is xxxxxx to xxxx its xxxx payments xxx credit xxxxxx may xx downgraded xxxxx can xxxxxxxx the xxxx of xxxxxx borrowing xxxxxxx flexibility xxxx financing xxxxxxxxxx typically xxxxxxx covenants xxxx restrict x company x ability xx undertake xxxxxxx activities xxxxx can xxxxx flexibility xxx growth xxxxxxxxxxxxx Potential xxx default xx a xxxxxxx is xxxxxx to xxxx its xxxx payments xx may xxxxxxx on xxx obligations xxxxx can xxxx to xxxxxxxxxx or xxxxxxxxxxMore Articles From Finance
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