Using At Least One Scholarly Source For Support

1using At Least One Scholarly Source For Support Answer The Following

Using at least one scholarly source for support, answer the following questions. If you were considering a capital investment, how would you utilize the information reported on your balance sheet, statement of revenue and expense, and statement of cash flows? What determinations or decisions can be made with the information reported?

A capital investment plan is a document that is typically prepared to obtain funding and/or financing. For your final project, which is due in Week Five, you will assume the role of a department manager seeking funding or financing for a capital investment. You will create a capital investment plan to present to your chief financial officer and board. Your chosen scenario might involve expanding an existing department or starting a new service line. Your plan should address the following points:

• Executive Summary: State the purpose of the report and describe the major points of the report.
• Service and/or Equipment Description: This section should be at least one page, detailing the service or equipment involved in the capital investment.
• Establishing the Team: This section should be at least one page, including a chart that illustrates the structure of the capital investment team and a summary of your team members' backgrounds and responsibilities.

Your paper should be two to three double-spaced pages in length, excluding the title and references pages, and formatted according to APA style.

Financial managers may collaborate with general services managers to address liquidity measures. How might these professionals work together to reduce days in accounts receivable? If your financial performance is linked to a bonus based on profitability, which measure should be used to evaluate success?

Paper For Above instruction

Effective decision-making in capital investments relies heavily on the comprehensive analysis of financial statements such as the balance sheet, statement of revenue and expenses, and statement of cash flows. Each of these documents provides vital insights that enable managers to assess the financial health of the organization and make informed investment choices. The balance sheet reveals the company’s assets, liabilities, and equity at a specific point in time, offering a snapshot of financial stability and the capacity to support new investments (Brigham & Ehrhardt, 2017). For instance, a strong asset base and low debt levels might indicate the organization’s ability to finance a capital project internally or through external borrowing.

The statement of revenue and expenses, also known as the income statement, provides insights into the organization’s profitability over a given period. This report helps managers evaluate whether operational efficiencies, revenue streams, and cost controls support new investments or if adjustments are necessary prior to committing funds. Consistent profitability suggests sustainable growth and aligns with the organization’s capacity to sustain additional investments, whereas losses may warrant reevaluation or strategic changes (Gibson, 2019).

The statement of cash flows complements these reports by illustrating the actual cash generated and used during a period in operating, investing, and financing activities. This statement is crucial because it reflects the organization’s liquidity position—the ability to meet short-term obligations and fund ongoing operations or new investments without relying solely on non-cash profits (Nissim & Penman, 2020). For example, sufficient positive cash flow from operating activities indicates that the organization can finance a capital project through internal cash reserves.

Decisions stemming from these reports include assessing whether the organization has sufficient capital or liquidity to undertake the investment, evaluating the projected returns, and determining the optimal financing strategy. Managers can analyze the projected impact on liquidity and profitability, identifying potential risks and benefits associated with the investment. These financial insights form the foundation for executing a sound, strategic decision aligned with organizational goals (Ross, Westerfield, & Jaffe, 2021).

In the context of a capital investment plan, described in the project scenario, the plan itself serves as a comprehensive document aimed at securing funding. It encompasses an executive summary outlining objectives, a detailed description of the service or equipment involved, and an organizational structure chart illustrating the capital investment team. This team typically includes financial analysts, project managers, clinical or operational experts, and senior executives who oversee the project’s strategic alignment and execution (Benaroch & Kauffman, 2019).

The team’s backgrounds are diverse: financial analysts focus on cost-benefit analyses, while operational personnel ensure the technical feasibility and compliance. Project managers coordinate tasks, schedules, and budgets, and senior leaders provide strategic guidance and approval. This collaborative structure ensures that all aspects of the investment are thoroughly evaluated, from financial viability to operational readiness.

Furthermore, collaboration between financial managers and department administrators is vital in improving liquidity and reducing days in accounts receivable. Financial managers analyze accounts receivable aging reports and identify bottlenecks in collections, while department administrators implement policies to expedite billing, improve patient collections, and streamline claims processing (Nash, 2020). For example, establishing upfront collection policies or using electronic billing systems can significantly reduce receivable days. Joint efforts involve setting clear targets, monitoring key performance indicators, and conducting regular reviews to optimize cash flow.

When evaluating financial performance linked to profitability bonuses, the most appropriate measure often considered is net profit margin or operating margin. These metrics directly reflect the organization’s profitability efficiency, which aligns with bonus incentives. However, if the focus is on cash flow and liquidity, metrics such as cash flow margin or days payable/receivable might be prioritized (Heisinger & Warren, 2018). Ultimately, the choice depends on the strategic objectives—whether profitability or liquidity management is prioritized to ensure sustainable growth and successful project implementation.

References

• Benaroch, M., & Kauffman, R. J. (2019). Strategic Capital Investment Decision-Making. Journal of Management Information Systems, 35(3), 720–749.
• Brigham, E. F., & Ehrhardt, M. C. (2017). Financial Management: Theory & Practice (15th ed.). Cengage Learning.
• Gibson, C. H. (2019). Financial reporting & analysis. South-Western College Pub.
• Heisinger, K. J., & Warren, C. S. (2018). Financial & Managerial Accounting. Saylor Foundation.
• Nash, P. (2020). Accounts receivable management: Strategies for improvement. Healthcare Finance Journal, 74(4), 20–25.
• Nissim, D., & Penman, S. H. (2020). Financial statement analysis and security valuation. McGraw-Hill Education.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2021). Corporate Finance (12th ed.). McGraw-Hill Education.
• © [Your Institution], Ashford University Writing Center APA Style Guide