Suppose you were the financial manager of a not-pro-profit business(a not-pro-hospital perhaps). What kinds of goals...

Suppose you were the financial manager of a not-pro-profit business(a not-pro-hospital perhaps).

What kinds of goals do you think would be appropriate?

Expert Solution

Let us take the example of the hospital business to analyze this situation. The financial manager of a not pro profit (different from non-profit) would have qualitatve objective such as (in case of the hospital under consideration) getting 'n' patients per day/month/time period to reach a particular patient turnover, keeping debts at level which can be easily serviced using the current cash flow generated, maintaining tax liabilities at levels which are again serviceable by the current cash flow generated. Infact a not pro profit business would imply that current levels of cash flows would be just close to break even or just be able to cover operating expenses, capital expenses if any, interest expenses and tax liabilities. Not Pro Profit businesses would not care too much about being in profit or generating positive cash flows. It would be bothered only with generating enough to cover all operational and miscellaneous expenses so as to keep concern running.

jeff jeffy answered 2 years ago

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