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Why Is Working Capital Important In Healthcare

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Working Capital
The ways in which financial statements, financial calculations, and working capital are used in the organizational budget process is to prepare the organizational budget. Financial statements provide actual dollars and budgeted dollars for the calendar or financial year of the organization. Financial calculations are calculations used by managers to translate the accounts of the financial statements. Some of the most common calculations used in healthcare are current ratio, days cash on hand, return on investment and inventory turnover. Working capital is the organization’s current assets; the assets available to run the organization in the short term. The organizations assets include the following: cash which is money on hand and money that the organization has immediate access to that is in a bank, short term securities which are investments with a maturity date of less than one year, accounts receivable which is money due to the organization from patients and insurance for services that have already been provided, inventories which is the value of supplies on hand that are properly presented as a …show more content…

Many of the services provided by healthcare organizations are provided in an urgent/emergent nature, at least this is what the patient thinks, and patients often do not have the time to raise the funds necessary to pay for the services they need or want. Services that are provided by healthcare organizations are services provided by highly trained personnel and high tech equipment, which is available 24 hours a day. Many of the services provided by healthcare organizations are reimbursed by third parties, such as insurance companies whose reimbursement rates are not at 100 percent (Nowicki,

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