Question

MHC 6305 Financial Management 1st is information: Healthcare organizations (HCOs) need to acquire long-term and short-term assets to fulfill thier mission to stakeholders.

In addition to receiving grants from federal and state sources, HCO managers need to raise capital from either dept, equity or both in some cases.

1. Identify and explain ten factors that affect an Healthcare organizations debt rating?

2. Provide five reasons why Healthcare managers would be concerned about debt valuation?

Appericated the help and information!

Answer 1

The credit rating of an healthcare organisation shows the history and background synopsis.

It is used to measure degree of financial risk.

It shows the probability that in what time it will make the repayment.

The information required can be collected from the clients with which the organisation is having business terms.

Following are the factors that affects an organisation debt rating:

1.The time frame within which the organisation is making the repayment of debt obligations like vendor payments, bills , loan etc.

2.The second factor is the business size and the structure of the organisation.

3.The third factor is goodwill and reputation of the organisation.

4.Organisation stock valuation.

5.Number of employees woking with the organisation.

6.Amount of personal credit and business credit.

7.Necessary licences and proper registration.

8.Quality of the care provided means quality services.

9.Market Position.

10.Satisfaction of the patients that means the type of arrangements in the hospital.

The major reasons that the healthcare managers would be concerned about the debt valuation:

1.Debt valuation is directly linked to the goodwill and reputation of the organisation.If the organisation are not making the repayments on time then it can hamper their reputation in the market.

2.Also investors investing in the organisation are always reading the financial statements and reports. So if the debt valuation is not proper then the organisation can't grow properly as it reduces investment opportunities.

3. For proper registration procedures like obtaining lisences it is very important that the organisation debt valuation reports are proper as this forms the part of documentation process when submitting the documnets for registration purposes.If the organisation is making any type of default then the license can be cancelled.

4.Repayment of debt on time improves the chances of increasing the stock valuation in the market.If the organisations are listed then it can increase the stock price.

5.If the organisation wants to apply for any further loan then any financial institution before lending any credit would check the credit rating report of previous years as cash is always not avaliable to run the business operations.