Case Study Questions
Case Study Write-up
Part I You have been working as an assistant to the financial manager at Happy Town Neurology for the past three and a half years, and there is finally an opportunity for you to advance to a lead position within the finance department. You are excited about this new position, but first, you must be able to accomplish a task that the current CFO is assigning to you. He is going to evaluate you on your ability to understand a cash budget and provide the neurology center with the necessary information to obtain the operating loans that they will need for the next calendar year. This process is more important than ever before because new federal legislation is putting a pinch on lending institutions by restricting their lending practices, and therefore, the new legislation will impact most. It is your goal to use sound financial management principles, utilize the department employees as time allows, fully calculate third-party reimbursement, and ultimately determine Happy Town’s borrowing requirements. Part II You feel prepared because of the experience you have within the finance department, but you also know that cash budgets are never certain, and that financial forecasting can help the organization to be prepared. First, you fully understand that you need to budget for the next 12-month period, so you decide to look at the historical data from the last several years. Also, you determine that you must also look at what cash is on hand today and what needs to be paid. Finally, you must consider each and every inflow and outflow that may affect your budget and, ultimately, your organization. Part III After looking at the available data, you realize that the neurology center is in an envious position because the patient revenues are extremely consistent throughout the year. This makes preparing your budget very easy, as you will be able to more readily break down the numbers and manage them on a monthly basis. As you continue your research, you find that more than...
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