Question

. How is working capital important to the health care organization of today? Why is it different in health care as opposed to other industries?

Answer 1

As we know that working capital very important for any type of organization because without sufficient working capital an organization may suffered with smooth runing regular operations or may loose some important oppurtunities in the market. Hence we can say that working capital is vital for an organization and proper management of working capital is very essential because shortage of working capital or excess working capital may lead to several types problems for the organization.

But there is unique importance of working capital for helathcare industry in compare to others due to followings reasons;

1. Headcare industry requires regular funds for the research & development in compare to other organization although every organization need R&D but healthcare industry needs regular R&D.

2. Healthcare industry needs regular funds for machines & technology.

3. Proper working capital helps in timely payment of current liabilities.

4. It will help in imroving goodwill & image of the healthcare organization due to timely payment of obligations.

5. Timely working capital is required for proper marketing strategies, thus working capital is very vital for healthcare organizations.

6. It will improve credit worthiness of the organization hence healthare organization can easily obtain required credits from the financial institutions.

As we know that working capital is needed for all types of organizations but there is the difference of importance because manufacturing & processing organization need working capital for long-time period in compare to healthcare industry. As healthcare organization needs working capial funds for lesser period of time in compare to other organizations hence there will be lower risk of default in receiving amounts from receivables and in making payments to accounts payables as well. Thus we can say that there is there is difference in the importance of working capital for healthcare organization and other types organizations.