Summary: Simulation Review

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Simulation Review HCS 405 February 16, 2015 Simulation Review Gilbert Sanchez, the Chief Executive Officer (CEO) of Elijah Heart Center (EHC) has requested the accounting firm Huber & Guizot perform an audit of the current budget being used by EHC to reverse the current financial shortfall they are facing. (University of Phoenix, 2012). Elijah Heart Center is an advanced coronary care unit that can accommodate one hundred and forty patients. The financial department of EHC has stated that patient volume and revenues are growing rapidly however the accounting statements clearly show that profitability is dropping. (University of Phoenix, 2012). Elijah Heart Center faces operating with a cash shortfall of almost $2,500,000.00. Mr.…show more content…
They were in need of a high speed CT scanner, new x-ray machine, and a new ultrasound machine. The three options for acquiring this new equipment were 1) New loan, 2) Operating lease, and 3. Capital lease. I suggested as the best options to acquire the equipment, 1) For the high speed CT scanner a re-furbished loan, 2) For the x-ray machine a capital lease, and 3) For the ultrasound machine an operating lease. These gave the best results for getting the needed equipment and minimizing the total cash outflow. The net result was a total outflow increase of $917.00 and an increase in total liabilities of $789.00. These slight increases were not enough to make any significant impact on the capability for profitable operation of…show more content…
Sanchez also was planning an expansion of Elijah Heart Center into a total heart care center for the patients that would be completely modernized and capable of caring for the patient’s needs for many years to come. Three options were available for Mr. Sanchez to choose from. 1) Tax exempt revenue bonds, 2) HUD 242 loan insurance program, and 3) Private bank funding. It is a better suggestion to go with the HUD 242 loan insurance program. The HUD 242 program has the lowest interest rate of the 3 options but the main reason for suggesting this option is that compared to bank loans which sometimes treats hospital loans as junk; the HUD 242 gives the financing an investment grade of AA or AAA. Also if interest rates dropped in the future Elijah Heart Center could buy back the bonds at a lower interest

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