Question

2 mother How can to escluate whether a hospildo nitacat uses more ebt or equity to finance. operations SA les SC 2 count TOT 23 24 25 100 02 obtener OFER 20 Tec res 20 - baltaiset

Answer 1

Anyone can evaluate whether a hospital uses more debt or equity to finance its operation by simply looking at the financial statement of the hospital.

In the Balance Sheet of the hospital, debt funds are generally shown under the heads ‘Non- Current Liabilities’ and ‘Current Liabilities’. Whereas equity funds are shown under ‘Stockholder’s Equity’.

Once the value of Equity and debts are available from the balance sheet, we are ready to evaluate how the hospital had financed its operation.

Note : From the view point of hospital,the decision regarding whether to finance more by equity fund or debt fund depends on various factors such as Market interest rate, Stockholder’s expected return etc.