Assume the following: - 20% of the hospital’s bills are paid on day 30 - 40%...
Assume the following:
- 20% of the hospital’s bills are paid on day 30
- 40% of the hospital’s bills are paid on day 60
- 28% of the hospital’s bills are paid on day 75
- The rest are paid on day 90
A) What is the hospital’s average collection period?_____________
B) If the hospital’s annual patient service revenue is $10,000,000 (assume 360 days), what is the current receivables balance? _____________________
Homework Answers
A) The average collection Period
=20%*30+40%*60+28%*75+12%*90=61.80
b) Current Receivables balance =Annual Revenue* Average Collection
Period/365 =10000000*61.80/365 =1,693,150.68
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