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Capital Budgeting Process Essay

942 words - 4 pages

Capital Budgeting Process
These are the six steps that organizations use when they are issuing bonds.
These steps are:
1. The healthcare provider plans and prepares for the issuance process. (Cleverley, Chapter 21)
2. The healthcare provider gets evaluated by a credit rating agency. (Cleverley, Chapter 21)
3. The bond is rated by a bond rating agency. (Cleverley, Chapter 21)
4. The healthcare provider provides a note or lease to the governmental authority, the issuer of the bonds, via a trustee. (Cleverley, Chapter 21)
5. The governmental authority delivers the bonds to one or more investment banking firms. (Cleverley, Chapter 21)
6. The investment banking firms sell the bonds to ...view middle of the document...

But according to the to the financial dictionary a short- term borrowing Referring to any investment, financial plan, or anything else lasting for one year or less. Short term investments and financial plans usually involve less uncertainty than long-term investments and financial plans because, generally speaking, market trends are more easily predictable for one year than for any longer period. Likewise, short-term financial plans are more easily amendable as a result of the short time frame. And a Long-term financing is described as a plan, strategy, security, or anything else with a term of longer than one year. The exact number of years varies according to the usage.(financial dictionary) At Omni American bank the long term loans was from one year up to five years some even ten years.
What are the primary sources of equity financing for not-for-profit healthcare organizations?
The primary sources of equity financing for not-for-profit health care organizations are internally generated funds, philanthropy, government grants, and sale of real estate or other medical office buildings, whereas the primary sources of equity financing for for-profit organizations are internally generated funds and stock issuances. Unfortunately, internally generated funds—those funds retained from operations (retained earnings)—are shrinking. As discussed in Chapter One, financial pressures have lowered revenues and eroded earnings for health care organizations, especially hospitals. However, these organizations still must be able to generate new sources of capital to be able to survive. (Safaribooksonline, chapter 8)
The capital budgeting process occurs in several stages, but generally includes what?
Capital budgeting can give many healthcare managers a major control tool. It can significantly affect the level of cost. This is especially true when not only the initial capital costs associated with given capital expenditures are considered but also the associated operating costs for salaries and supplies. (Cleverley, chapter...

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