HS
, A 464 Healthcare Finance Study Guide 2025/2
026: Working Capital, Revenue Cycle, Mat
erials, Budgeting &
Chapter 10: Managing Working Capital
Working capital is defined as the...
sum of a healthcare organization's investment in current assets.
Examples of current assets include...
prepaid expenses
Liquidity refers to...
how quickly an asset can be converted into cash.
What are the advantages of having sufficient working capital on hand?
-Organizations are able to pay their employees and vendors on time, thereby maintaining a
positive relationship.
&
-Organizations have sufficient resources to repay loans and are therefore creditworthy.
Where does initial working capital for for-profit healthcare organizations come from?
The sale of stock
Permanent working capital is...
the minimum amount of working capital always on hand
Sources of temporary working capital include...
-trade credit
-equity
-debt
An organization using trade credits to finance temporary working capital is essentially...
borrowing money from a vendor for delaying payment to the vendor for goods or services
already received.
What does the term "5-15, net 30" mean?
, A 464 Healthcare Finance Study Guide 2025/2
026: Working Capital, Revenue Cycle, Mat
erials, Budgeting &
Chapter 10: Managing Working Capital
Working capital is defined as the...
sum of a healthcare organization's investment in current assets.
Examples of current assets include...
prepaid expenses
Liquidity refers to...
how quickly an asset can be converted into cash.
What are the advantages of having sufficient working capital on hand?
-Organizations are able to pay their employees and vendors on time, thereby maintaining a
positive relationship.
&
-Organizations have sufficient resources to repay loans and are therefore creditworthy.
Where does initial working capital for for-profit healthcare organizations come from?
The sale of stock
Permanent working capital is...
the minimum amount of working capital always on hand
Sources of temporary working capital include...
-trade credit
-equity
-debt
An organization using trade credits to finance temporary working capital is essentially...
borrowing money from a vendor for delaying payment to the vendor for goods or services
already received.
What does the term "5-15, net 30" mean?
