Benefits Of A Healthy Cash Surplus On Hand

1417 WordsSep 24, 20156 Pages
Having a healthy cash surplus on hand, or days cash on hand (DCOH) is necessary to maintain a successful, productive and longstanding healthcare organization. When distinguishing the days cash on hand, which signifies the number of days that Chesapeake Health Plans could maintain their operations without any incoming revenue, it is essential to combine the organizations cash with their marketable securities, and divide that between the cash expenses, which are multiplied by the number of days in the year. Although the DCOH of 2009 is excessively high at 29.6 days, Chesapeake Health Plans showed a considerable decline in 2009 DCOH, from that of the previous year. This reduction dropped from 45.3 days in 2008 to 29.6 days in 2009. This decrease is due to a significant reduction in cash, which is apparent on the company’s balance sheet. Moreover, the higher DCOH in 2008 was a reflection of the organizations operational efficiency and a strong cash supply. Moreover, the company’s 2009 DCOH was below the upper quartile of 32.7, but above the median of 10.0 days, which reflects a consistently high surplus of capital. Chesapeake Health Plans debt management structure reflected a significant decline from the 2008 fiscal year of 68% to 55.2% in 2009. This decrease was a 13% drop from that of the previous year. By dividing the total debt by the total assets, Chesapeake’s debt ratios can be calculated and further managed effectively. Furthermore, these figures from
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