Capital Acquisition Paper Example

Introduction

A capital acquisition is the construction or purchase of physical assets - buildings, land, or major buildings, directly by the government for its use. The fund excludes donations and grants for the acquisition of physical assets, as well as expenditures for the conduct of training, training, and R&D. For the present case, the government has consolidated capital acquisition into a single fund but subdivided according to departments. The acquisition financing allows the recipient organization to meet current aspirations of asset acquisitions through the provision of immediate resources, which are applicable towards such transactions. The commonest approaches to approaches to acquisition financing are a traditional loan or line of credit. Favorable rate rates of financing can be instrumental in ensuring economies of scale and is commonly perceived as the most effective approach to expand operations. Depending on the scale of operations and the nature of the capital acquisition, there are numerous financing options, which range from loan program and debt.

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The high occupancy rate of beds in the hospital is considered an issue of reduced patient privacy and comfort and a predictor of high productivity for medical facilities. In the present case, the rate of bed occupancy is above eighty-five percent and is considered to be facing a shortage of beds. The government places significant focus on the effect of such shortages on the patients' health outcomes. Studies have linked high rates of bed occupancy to significant nine percent increases in the in-hospital mortality, in comparison to low rates of bed occupancy. Weekend admission or admission outside normal operating hours is significantly linked to the high rate of mortality. The risk of the bed shortage, such as mortality, is a priority health issue, and the hospital management has been compelled seek measures to address the high bed occupancy rate through capital acquisition (Van Praag, 2013).

The motivation behind these acquisitions is, ultimately, to develop the general benefits of a healthcare department. Accordingly, the procedure of securing financing requires a capacity in the assessment of the asset to be procured, and additionally the different financing choices. A capital acquisition is useful in funding operations when the organization is financially limited to fund its operations (Clark, Hindelang, and Pritchard, 2016).

Justification of Capital Acquisition

The capital acquisition by far is different from the funding of continuous growth and expansion of the daily operations (Baker, 2011). The funds are necessary to address bed shortage in the hospital and increase efficiency, as well as reduce in-hospital efficiency. At the end of the day, because the department is not operating at full capacity because of the said shortages, it is capital acquisition is a typical strategy to employ and take advantage of through expanded income, higher value, more capacity to pull in capital and capable administration, and business sustainability.

Capital Budget

Planning is essential to the achievement of any business, no matter the size of the business. Diverse kinds of spending plans, notwithstanding, are significant to an organization's profit or loss. Operating budget items, for example, salaries for employees are recurrent, frequently paid week by week or month to month. Alternatively, capital resources, for example, hardware, structures, and vehicles are not commonly traded for quite a while. Capital planning decides whether a long-term investment is in the interest of the organization. The two types of spending plans do not each exist independently but rather an integrated approach. Seeing how they associate with each other is key in setting up the capital spending plan (Peterson and Fabozzi, 2002).

In this evaluation, it is appropriate to use the throughput analysis regardless of its complexity. As a practical scenario, the evaluation will also incorporate a DCF analysis adds to the other outlined approach to outstanding accuracy for the organizational use and implementation.

Evaluation of Equipment Costs and Services

• Gross patient service revenue $ 28,500,500. 00
• Provision for bad debts and discounts $ 10,200,300. 00
• Net patient service revenue $ 18,300,200. 00
• Other revenues $ 415,600. 00
• Total revenue $ 18,715,500. 00

Non-operational revenue

• District tax revenue $ 2,300,000. 00
• Interest expense $ 213,245. 00
• Investment income $ 30,000. 00
• Grants and contributions $ 28,000. 00
• Others $ 99,455. 00
• Total $ 2,670,700. 00
• Salaries and wages $ 5,100,125. 00
• Employment benefits $ 1,200,345. 00
• Supplies $ 1,135,765. 00
• Professional fees $ 1,300,175. 00
• Rent $ 156,000. 00
• Purchased services $ 325,235. 00
• Insurance $ 202,200. 00
• Utilities $ 300,450. 00
• Depreciation $ 975,890. 00
• Others $ 412,500. 00
• Total expense $ 11,108,685. 00
• Loss from operations $ 1,035,675. 00
• Grand Total $ 21,386,200. 00
• Total $ 12,144,360. 00
• Bal b/d $ 9,241,840

According to this evaluation, the organization is profitable and the proposed strategy should be implemented without a doubt. The expenses incurred for the acquisition of equipment, maintenance, support services and other costs are all compiled and their effects on the project justified. Similarly, the revenue has been evaluated and the financial impacts determined.

Calculating Cost

In process costing, the technique is fetched (not in the least like job costing where every action is accounted autonomously) (Timmons and Spinelli, 2014). The below methodology is used to take the total cost of the strategy and average it over the units of creation.

1685924222885Cost per unit = Cost of data sources

Expected yield in units

Budget Management

Next are five systems for keeping up control of task spending plan before it succumbs to stupendous cost crops up. The organization should comprehend partner's actual needs and wants, set an appropriate standard for cost monitoring and audit, and ensure that all stakeholders are on-board and remain informed and responsible.

Impacts of the Capital Acquisition on Financial Accountability

The two sorts of capital financing (Debt and Equity) carry some degree of the cost that must be paid to get to access to funds, known as the cost of capital. For debt capital, this is the credit cost charged by the moneylender. The cost of equity is addressed by the rate of quantifiable benefit that speculators expect in interests. While debt tends to cost not as much as equity, the two sorts of capital financing influence a company's general incomes in crucial ways (Timmons and Spinelli, 2014). Perhaps the most apparent case of this is the impact of debt on the fundamental issue. Some place near operational expenses and the net profit figure on a company's wage statement lies costs achieved for the portion of depts. A company with a particular debt overpowering capital structure makes greater interest portions each year, in this way diminishing net advantage (Dayananda, 2012).

The impact of equity financing on an association's net incomes is comparably crucial, however not precisely so immediate. While equity funds empower improvement without requiring repayment, financial specialists are permitted confined ownership rights, including voting rights. They do expect a return on their investment in the form of a dividend, which is paid if the company turns makes a profit. A business upheld by shareholder equity is under commitment to its shareholders and should remain dependably valuable remembering the real objective to fulfill this dedication (New Mexico, 2010).

Budget Data and Information

Proprietors or managers look to data from inside and outside the business to start this process. Internal sources of information will be data that starts from inside the company and outer sources begin from outside the company. This refinement is critical to comprehend as internal of information are constantly utilized as a significant aspect of the customary budget process. However, administrators must search out external information and after that settle on a choice concerning whether that data is applicable for their feasible arrangements (Dayananda, 2012).

External information sources should also be utilized precisely to guarantee they are dependable and applicable for the budgeting that is being prepared (Timmons and Spinelli, 2014). Sometimes proprietors and supervisors discover the time and cost involved in getting to data far exceeds the advantages to the financial plan from that information. When proprietors and administrators have gathered inner and outer information, the process starts where all sources of information must be looked into and broken down for appropriateness, significance, and availability in the budgeting preparation process (Van Praag, 2013). The nature of the final spending plan is just in the same class as the nature of the data that is utilized to aggregate that financial plan. It is in this way essential that proprietors and administrators give fitting time to this piece of the budget process.

These financial resources will fund the expansion of the ward section of the hospital, as well as the acquisition of extra beds and support equipment. It has been shown that the organization is in a sound financial position to service the loan. Measures ought to be put in place to ensure effective management of costs to ensure they do not overwhelm the initial objective. The funds are necessary to address bed shortage in the hospital and increase efficiency, as well as reduce in-hospital efficiency. At the end of the day, because the department is not operating at full capacity because of the said shortages, it is capital acquisition is a typical strategy to employ and take advantage of through expanded income, higher value, more capacity to pull in capital and capable administration, and business sustainability. The impact of equity financing on an association's net incomes is comparably crucial, however not precisely so immediate. While equity funds empower improvement without requiring repayment, financial specialists are permitted confined ownership rights, including voting rights. They do expect a return on their investment in the form of a dividend, which is paid if the company turns makes a profit.

Conclusion

Empirical evidence has provided evidence that links high bed occupancy to high in-hospital occupancy. These studies have correlated high occupancy will numerous hazards, such as staff overload, patient safety, and privacy issues. An elevated level of hospital loading is related to reduce institutional mortality. These problems have contributed to poor health outcomes for patients, as well as compromised comfort and privacy of both hospital attendants and the patients. The productivity and efficiency of the hospital have deteriorated, which have necessitated the need to seek fund to address the resource limitatio...