HCM631-0901B-01 Systems in Health Care - Phase 1 Discussion Board - Essay Example

Resource and Financial Management Capital: Any business requires initial investment in order to purchase fixed assets like land, building, plant, machinery, etc.., These funds are required at start-up of a new business or when an existing organization decides to expand its operations or diversify into new fields. The running of an operation would also require certain fixed costs and these are also taken as the requirements for the business. This is called the Capital of the business. In other words, cash or goods invested which in turn generate more income is called the Capital Investment (Samuels, Wilkes and Brayshaw, 2000).2. Alternative Capital Analysis:Alternative capital analysis involves assessing the various options available to raise funds for investment.

This is very essential as there are a number of factors to be considered before making a decision about the source of funds. Alternative capital analysis focuses on the risks associated with each source. Also there are other non-financial factors to be considered when analyzing the sources of finance, such as ownership of the company, voting rights, decision making, etc.., In the case of Cactus Health Inc., it is essential to consider the risks associated with the capital scenarios, as the company does not have a clear risk management and there are no expenditure guidelines.

Hence it is essential to choose a low risk option (Weston and Copeland, 1988). 3. Potential Capital Sources:The two most appropriate capital sources for Cactus Health Inc., are Equity Shares and Debentures. As the operations of Cactus Health are diversified and there is a lot of opportunity for development, the effective way to raise additional capital is through an initial public offering and entering the stock market.Equity Shares:An equity share represents a share of the company’s assets and a share of earnings after the claims are met.

Equity shareholders are the owners of the business and have a right in the company for the percentage of shares owned by them. Also, the risk is borne by the shareholders who invest in the company. Cactus can either sell some of the existing shares or can issue new shares in order to raise some surplus finance for investing in other ventures (http://financial-dictionary.thefreedictionary.com/Equity+securities).Debentures:Debentures are bonds issued to the investors in exchange for finance lent to the company.

Cactus can borrow money in the form of debentures from the public, by agreeing to repay the sum by some future date. Also, Cactus has to pay an interest to the creditors (debenture bond holders) before paying out dividends to the shareholders. Hence, in this case, debentures have a little risk attached to them compared to the shareholders, as far as the company is concerned (http://www.bized.co.uk/learn/accounting/financial/sources/debentures.htm).4. Internal and External Resources:Internal resources include the employees and their skill sets, fixed assets and the customer base of the company.

The internal resources are basically everything owned by the company, both tangible and intangible. External resources include the company’s the brand equity and other non-financial factors, such as the customer trust in Cactus, etc.., The relationship with the suppliers, the value of the suppliers, the potential investors, political influence, etc.., are also considered as external resources for Cactus Health Inc (Ogilvie and Koch, 2002).5. Operating Capital Strategy:Cactus Health Inc. has to identify the most profitable modules within the corporation and allocate a higher budget for its operations.

It is evident that the acute hospitals are profitable and hence higher working capital has to be allocated for these two facilities. The health insurance is also gaining more popularity and the local residents are satisfied with the services. Hence more focus can be given to improve the health insurance facilities. It is also important to analyze the reasons for the increase in the costs in the nursing homes and community health centers. The operations in these facilities have to be made efficient even if it requires an investment in technology and training (Samuels, Wilkes and Brayshaw, 2000).

BibliographyOgilvie, J. and Koch, B., 2002, The Chartered Institute of Management Accountants Study System, Finance, 1st edn., Viva Groups, New DelhiSamuels, J. M., Wilkes, F. M. and Brayshaw, R. E., 2000, Management of Company Finance, 6th edn, Thomson Learning, LondonWeston, J. F. and Copeland, T. E., 1988, Managerial Finance, 2nd edn., Cassell Educational Ltd, London