Question

How will you, as a health care manager, be involved in long-term financing for your organization? Provide examples

Answer 1

Answer: As a health manager, I will be involved in long term financing decision for my organization and I will follow these steps in choosing the financing alternative:

Seeking the financing alternatives- I will be a part of seeking the financial alternatives for my organization. I will find out number of available alternatives in the market such as equity financing, debt financing, bank loan, private equity, venture capital etc.

Evaluating and analyzing the financing alternatives- I and my team will evaluate and analyze the cost of capital of each and every financial alternative, we will do cost-benefit analysis and try to seek lower weighted average cost of capital so that profit can be increased.

Choosing the best one- We will choose the best alternative with lower cost of capital or we can choose the two financing alternatives that give optimal WACC. There should be ideal ratio between debt and equity, whole or more financing should not be done through debt because debt is an obligation and company has to pay interest over it. There may be a mix of debt and equity.

Follow up and control- After choosing the best and cheaper alternative, we have to follow its outcomes in the future and also have to control the cost of capital if it is increasing.