Review Mini-Case Study 1 in Chapter 26 in your assigned course textbook.
In a one-to-two page paper, explain why you would or would not accept the
proposal to add a retail pharmacy to a hospital. List at least three
improvements that could be made to the proposal to make it more
effective.

Chapter 26:

Sample General hospital belongs to
the Metropolis Health System. The new chief financial officer(CFO) at
Sample hospital has been attempting to find  new sources of badly needed
revenue for the facility. Consequently, the CFO is preparing a proposal
to add a retail pharmacy within the hospital itself. If the proposal
four exhibits, all of which appear at the end of this case .Exhibit
26-1, the “3-year retail pharmacy profitability analysis,” is the
primary document.It is supported by Exhibit 26-2, the”Retail pharmacy
proposal assumptions.”The profitability analysis is further supported by
Exhibit 26-3, the “year 1 monthly income statement detail.”Finally,
exhibit 26-4 presents the supporting”Year 1 monthly cash flow detail and
assumptions.When the controller reviewed the exhibits,she asked how the
working capital of $49,789 was derived. The CFO explained that it
represents three months of departmental expense. He also explained that
the cost of drugs purchased for the first 60 days was offset by these
purchases’ accounts payable cycle, so the net effect was zero.In
essence, the vendors were financing the drug purchases. Thus, the
working capital reconciled as follows:

Working Capital:

Cost of drugs(2 months) $303,400

Vendor financing (accounts payable)($303,400)

Departmental expense(3 months) $49,789

Total working capital required  $49,789

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