Unformatted Attachment Preview
Class: Financial Management of Healthcare Organizations
Text-book: Healthcare Finance: An Introduction to Accounting and Financial Management
This week's readings:
•
•
•
The Basics of Capital Budgeting
Project Risk analysis
Current Asset Management and Financing
Assignment 1: Discussion Assignment
For this assignment, make sure you post your initial response to the Discussion Area by Saturday, June 20, 2015.
To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your
work and provide references for the citations in APA format.
Start reviewing and responding to the postings of your classmates as early in the week as possible. Respond to at least two of your classmates' initial postings.
Participate in the discussion by asking a question, providing a statement of clarification, providing a point of view with a rationale, challenging an aspect of the
discussion, or indicating a relationship between two or more lines of reasoning in the discussion. Cite sources in your responses to other classmates. Complete
your participation for this assignment by Wednesday, June 24, 2015.
Financial Analysis
Write your initial response in 1–2 paragraphs in approximately 300 words.
•
For multihospital systems, scenario analysis has both advantages and disadvantages. Which do you think are the greater?
•
Why should or shouldn't financial analysis play a dominant role in capital budgeting decisions?
Provide reasons for and evidence in support of your responses.
Comment on the postings of two of your classmates.
Be sure to cite any relevant resources used in framing your responses. Apply APA standards to cite sources.
© 2015 South University
Objectives
Unacceptable
0 Points
Satisfactory (C Range)
28 to 31 Points
No initial
posting to
evaluate.
The information
provided is inaccurate,
not focused on the
assignment’s topic,
and/or does not answer
the question(s) fully.
Response
demonstrates
incomplete
understanding of the
topic and/or inadequate
preparation.
The information provided is
accurate, giving a basic
understanding of the
topic(s) covered. A basic
understanding is when you
are able to describe the
terms and concepts
covered. Despite this basic
understanding, initial
posting may not include
complete development of
all aspects of the
assignment.
0 Points
1 to 13 Points
No responses
to other
classmates in
this discussion
forum.
Above Average (B
Range)
32 to 35 Points
Exemplary (A Range)
36 to 40 Points
Score
_ out of 40
The information provided is
accurate, providing an indepth, well thought-out
understanding of the topic(s)
covered. An in-depth
understanding provides an
analysis of the information,
synthesizing what is learned
from the course/assigned
readings.
14 to 15 Points
The information provided is
accurate, displaying a
good understanding of the
topic(s) covered. A good
understanding is when you
are able to explain the
terms and topics covered.
Initial posting
demonstrates sincere
reflection and addresses
most aspects of the
assignment, although all
concepts may not be fully
developed.
16 to 17 Points
18 to 20 Points
_ out of 20
May include one or
more of the following:
*Comments to only one
other student's post.
*Comments are not
substantive, such as
just one line or saying,
“Good job,” or “I
agree.”
*Comments are off
topic.
Comments to two or more
classmates’ initial posts but
only on one day of the
week. Comments are
substantive, meaning you
reflect and expand on what
the other students wrote.
Comments to two or more
classmates’ initial posts on
more than one day.
Comments are
substantive, meaning they
reflect and expand on what
the other students wrote.
0 Points
1 to 13 Points
14 to 15 Points
16 to 17 Points
Comments to two or more
classmates’ initial posts and
to the instructor's comment
(if applicable) on more than
two days. Responses
demonstrate an analysis of
peers’ comments, building
on previous posts.
Comments extend and
deepen meaningful
conversation and may
include a follow-up question.
18 to 20 Points
_ out of 20
No postings
for which to
evaluate
language and
grammar.
Numerous issues in
any of the following:
grammar, mechanics,
spelling, use of slang,
and incomplete or
missing APA citations
and references. If
required for the
assignment, did not
use course, text, and/or
outside readings
(where relevant) to
support work.
Some spelling,
grammatical, and/or
structural errors. Some
errors in APA formatting
(citations and references).
If required for the
assignment, utilizes
sources to support work for
initial post but not
comments to other
students. Sources include
course/text readings but
outside sources (when
relevant) include nonacademic/authoritative,
such as Wikis and .com
resources.
Minor errors in grammar,
mechanics, or spelling in
the initial posting. Minor
errors in APA formatting
(citations and references).
If required for the
assignment, utilizes
sources to support work for
both the initial post and
some of the comments to
other students. Sources
include course and text
readings as well as outside
sources (when relevant)
that are academic and
authoritative (e.g., journal
articles, other text books,
.gov websites, professional
organization websites).
Comments:
Quality of
Initial
Posting
Participation
in
Discussion
Emerging (F through
D Range)
1 to 27 Points
Writing
Mechanics
(Spelling,
Grammar,
APA) and
Information
Literacy
Total Score:
Quality of Initial Posting
Minor to no errors in
grammar, mechanics, or
spelling in both the initial
post and comments to
others. APA formatting is
correct. If required for the
assignment, utilizes sources
to support work for both the
initial post and the
comments to other students.
Sources include course and
text readings as well as
outside sources (when
relevant) that are academic
and authoritative (e.g.,
journal articles, other text
books, .gov websites,
professional organization
websites).
40
© 2015 South University
Participation in Discussion
Writing Mechanics (Spelling,
Grammar, and APA) and
Information Literacy
Total
20
20
80
© 2015 South University
There is an understanding that as a CFO one must be able to know and use a Capital asset pricing model.
In is one of the most important tools in calculating the return to be taken from a certain investment that the
organization may take. It is a better way given that every investment must be calculated against or on the basis
of the risk on losses. The use of the capital asset pricing employs the risk multiplier in the calculations in order
to measure the risks appropriately. Such multiplier is what is known as the beta coefficient.
However, despite it being one of the most used and appropriate way to measure the risk, CAPM uses
assumptions. There are also weaknesses that accompany the capital asset pricing model. These are the
disadvantages and limitations that are noted in the technique in calculating the return on investment. The very
first is that it is built on assumptions that provide unrealistic real world picture. The assumption is unattainable
though the models require its usage (Ogilvie and Chartered Institute of Management Accountants. 2009). There
is no way that an investor can be able to borrow at the rate in which a government borrows thus meaning that
the return might be lower than the one provided by the calculation.
The other weakness is that the firm that decides to use the tool in assessing the investment will be
required to use the beta reflective for such investment. However, it becomes more inefficient and unreliable
outcomes might be experienced when such assessment is used given that determination of project the project is
somewhat impossible. Therefore it might affect the reliability of the results given through the capital asset
pricing model in the firm.
The other disadvantage is that the use of risk free rate as provided by the short-term government
securities and used in this model may make the input unstable. The risk free rate is likely to change over a day
making it more and more unreliable for the use in getting the return on investment. Government securities
changes in yield on a daily bases as per securities and exchange market and you cannot be able to define an
exact exchange rate meaning that whatever the results there might be lower or higher than the actual value.
The other disadvantage is that the model uses the long-term market return to ensure that there is stable or
smooth return. This is because it is possible that there are times when the market return which is determined by
capital gains and divides can be negative. In such cases, there can also be misrepresentation of the future returns
in the market since the returns will consist of a negative factor. Use of security market line as a representation
in the model is a better way of determining the expected return for risk for the items or the assets that are being
used for the investment.
The best option between debt and equity financing is a better way for a startup given that there are no
obligations for repaying the equity investors. There are no hustles brought by interest rates and the business is
not likely to make losses when proper information has been given to investors (Vernimmen, Quiry, Dallocchio,
Le and Salvi, 2014). With the availability of good investors, the best option would only be on equity financing
rather than using the debt financing.
References
Ogilvie, J., & Chartered Institute of Management Accountants. (2009). F3: Financial strategy.
CIMA/Elsevier.
Vernimmen, P., Quiry, P., Dallocchio, M., Le, F. Y., & Salvi, A. (2014). Corporate finance:
practice.
Oxford:
Theory and
© 2015 South University