The Working Capital Cycle

1097 Words Jan 27th, 2014 5 Pages
The Working Capital Cycle and the Cost of Credit

1. In terms of cash flow, what are the stages of the working capital cycle?
Cash flows in a cycle into, around and out of a business. It is the business's life blood and every manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire. limit, you effectively create free finance to help fund future sales. Each component of working capital (namely inventory, receivables and payables) has two dimensions. TIME and MONEY. When it comes to managing working capital - TIME IS
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Examples of current liabilities are inventory purchases, employee wages, taxes and accounts payable. Unearned revenue is also considered a current liability, meaning you've been paid for goods or services but have not yet delivered the product. Generally, current liabilities are expected to be paid during a one-year time period.

3. What are the two types of unsecured bank loans? Describe each.

4. In the hospital’s billing process, why is a medical record a critical department?

Streamline billing processes by eliminating time-consuming searches and providing claim processors and services representatives with instant access to information. * Scan charts and other documents at the point of service, and automatically route them through verification, coding and billing workflows. * Shorten billing cycles and enable faster discrepancy resolution with on-demand access to EOBs, claims, statements and remittance information. * Perform electronic ADT-to-chart reconciliation. * Manage interactions with primary, secondary and tertiary payers more efficiently. * Simplify integration with coding, billing and other applications with an open architecture and support for the HL7 protocol.

5. Identify the alternatives for investing cash on a short-term basis, and discuss the general characteristics of each.
An organization’s short-term cash can be broken into three distinct parts: operating

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