# Financial Problems

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Hi there,Attached please find the Excel template provided with all work completed. That is to say, every problem is answered completely, with citations included :)Thanks again,Selenica

UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 15 -- Revenue Cycle and Current Accounts Management
PROBLEM 2
James Buchanan Orthotics and Prosthetics is planning to request a line of credit from its bank.
The company has produced sales estimates, and these appear in the worksheet below. Collection
estimates are as follows: 10 percent within the month of sale, 75 percent in the month following
the sale, and 15 percent in the second month following the sale. Labor and supplies estimates also
appear in the worksheet below. Payments for labor and supplies are typically made during the
month following the one in which these costs have been incurred. General and administrative
salaries will amount to approximately \$27,000 a month; lease payments under long-term lease
contracts will be \$9,000 a month; depreciation charges will be \$36,000 a month; miscellaneous
expenses will be \$2,700 a month; income tax payments of \$63,000 will be due in both September
and December; and a progress payment of \$180,000 on a new building must be paid in October.
Cash on hand on July 1 will amount to \$132,000, and a minimum cash balance of \$90,000 will be
maintained throughout the cash budget period. What loan will be the company require in
October?
May
Collections worksheet:
Billed charges
Collections
Within 30 days
30-60 days
60-90 days
Total collections
Supplies worksheet:
Amount of labor and supplies
Payments made for labor and supplies
Net cash gain (loss):
Total collections
Total purchases
Lease payments
Miscellaneous expenses
Taxes
Progress payment
Total payments
Net cash gain/loss
Borrowing/surplus summary:
Cash at beginning with no borrowing
Cash at end with no borrowing
Target cash balance (given)
Cumulative surplus cash / loan balance

\$180,000

June

July

\$180,000

18,000

18,000
135,000

18,000

153,000

\$90,000

18,000
0
27000
9000
2700

38,700
-20,700

\$90,000
\$90,000

153,000
90000
27000
9000
2700

128,700
24,300

August
\$360,000

36,000
135,000
27,000
198,000

\$126,000
\$90,000

198,000
90000
27000
9000
2700

128,700
69,300

132,000
201,300
90,000
111,300

\$540,000
54,000
270,000
27,000
351,000

\$882,000
\$126,000

351,000
126000
27000
9000
2700

164,700
186,300

201,300
387,600
90,000
297,600

September
\$720,000
72,000
405,000
54,000
531,000

\$306,000
\$882,000

531,000
882000
27000
9000
2700
63000
983,700
-452,700

387,600
-65,100
90,000
-155,100
Loan

October
\$360,000
36,000
540,000
81,000
657,000

\$234,000
\$306,000

657,000
306000
27000
9000
2700
180000
524,700
132,300

-65,100
67,200
90,000
-22,800
Loan

November
\$360,000
36,000
270,000
108,000
414,000

\$162,000
\$234,000

414,000
234000
27000
9000
2700

272,700
141,300

67,200
208,500
90,000
118,500

December
\$90,000
9,000
270,000
54,000
333,000

\$90,000
\$162,000

333,000
162000
27000
9000
2700
63000
263,700
69,300

208,500
277,800
90,000
187,800

January
\$180,000
18,000
67,500
54,000
139,500

\$90,000

139,500
90000
27000
9000
2700

128,700
10,800

277,800
288,600
90,000
198,600

UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 15 -- Revenue Cycle and Current ...

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