Essay: Financial Resource Management Reaching

Pages: 8 (2362 words)  ·  Bibliography Sources: 8  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] The theory for taxing does allow them however, in practical terms, to invest some amount in taxable securities from tax exempt issues while waiting for expenses to be taken care of. In theory it means, if not for profit companies can work in a tax arbitrage environment, they can create huge amounts of income just by dispensing tax exempt bonds with the intention of capitalizing in bigger yielding securities which are taxable to investors outside not for profit industry. For instance, the not for Profit Company can sell tax exempt bond with 5% interest rate and take the revenues generated to put into U.S. Treasury bond which generate 6% (Helvin, 2008).

Equity or debt capital can be employed to finance a company's assets. Both these theories and their practical implementations are thus important to study here as well. In case financing is done by means of debt then the payment of interest becomes a necessity. However, if the company possessed by a financier finances the assets through equity then it is required to reimburse the dividends to the shareholders. If a corporation, on which the tax is levied, is paying interest then it will be subtracted from that firm's operating income so that its taxable income is obtained. However, dividend will not be subtracted. According to Kaufman (2007), payment of dividend is done from the income obtained after tax.

The matching principle is one of the basic principles in Accounting and also a crucial theory to study in this course. This requires that all the revenues are registered in the same year as the expenses. For instance, the example can be taken of Northside Family Practice that purchases an x-ray machine for a cost of $100,000. This machine will become obsolete after 10 years of usage by the company. The wear and tear of capital or in this case the capital consumption allowance for the machine will be considered as the depreciation of the machine and it will have to be accordingly adjusted. This would reduce the profit of the organization, thus, the higher amount of depreciation a company registers, the less profit would be recorded. Still, it is a noncash expense and has no effect on the level of cash of the company. This in fact enhances the level of cash the company has as the amount of tax that will be levied on the earnings of the company will become lower if depreciation is deducted (Speizman, 2009).

Conclusion

During times of higher earnings along with plentiful monetary sources, the finance functionality has a tendency to fall in significance. Therefore, whenever most healthcare service providers had been refunded around the reasons of expenses sustained, the function of finance had been nominal. In those days, probably the most crucial finance functionality had been cost accounting simply because it had been much more essential to take into account expenses than it had been to manage them. These days, nevertheless, healthcare companies are dealing with an ever more aggressive monetary atmosphere, and therefore any student or curriculum that disregards the finance functionality can run the danger of monetary degeneration, which in the end for the student can result in incompetent approaches to finance resource management which can lead to decrease in job opportunities and can result in bankruptcy as well as closure for the company that they work for. This will then taint their portfolio and resume significantly.

In current times, providers happen to be renovating their particular finance characteristics to acknowledge the modifications which have been taking place within the health services business. Traditionally, the concept of finance was powered through the Medicare plan, which required that service providers (mainly medical centers) generate numerous reviews to conform to rules and increase Medicare income. Third-party compensation difficulties necessitated that a sizable period of time had to end up being allocated to complicated accounting, payment, as well as collection processes; therefore, as opposed to concentrating on value-adding functions, most financial efforts centered on bureaucratic tasks. These days, to be of optimum worth towards the business, the finance resource management courses should support cost-containment initiatives, managed health care as well as other payer agreement negotiations, partnership preferences, as well as integrated delivery process engagement. Finance resource management courses should assist guide businesses towards the future instead of simply document what's occurred within the past years (Allen and Bombardieri, 2008).

References

Allen, S., and M. Bombardieri. 2008. "A Healthcare System Badly Out of Balance." The Boston Globe, November 16.

Glaeser, E.L. 2004. "The Governance of Not-for-Profit Organizations." The International Journal of Not-for-Profit Law 6 (3).

Halvorson, G.C. 2005. "Healthcare Tipping Points." Healthcare Financial Management (March): 74 -- 80.

Helvin, L.K. 2008. "Caring for the Uninsured: Are Not-for-Profit Hospitals Doing Their Share?" Yale Journal of Health Policy, Law, and Ethics (summer): 421 -- 70.

Kaufman, K. 2007. "Taking Care of Your Organization's Financial Health." Healthcare Executive 22 (1): 15 -- 16, 18 -- 20.

Sandrick, K.M. 2008. "Super CFO: Hospital Financial Leaders Soar to New Leadership Heights." Healthcare Financial Management (June): 98 -- 103.

Speizman, R.A. 2009. "Tax-Exempt Status for Hospitals: Where We Have Been -- and… [END OF PREVIEW]

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