Question

Cash Flows Statement for King Hospital is included below: After reviewing the statement, address the following issues in your analysis discussion. You do not have to use APA format. Be sure you cover each discussion point in your answer. You may do that in paragraph form or by using a bulleted list of discussion points (1-5).  

Discussion point 3: What is generating cash for this organization? (3 points)

King Hospital Statement of Cash Flows for Fiscal Years Ending June 30, 2019 and 2018 (000s omitted)

Cash Flow from Operating Activities                                      2019                            2018

Collections from patients and third-party payers              $17,825                         $16,232

Collections from other operating activities                           1, 919                          1,432

Payments to suppliers                                                               (2,122)                        (1,876)

Interest payments                                                                     (2,333)                         (2,290)

Payments to employees                                                           (14,228)                      (12,055)

Net cash from operating activities                                            $ 1,061                        $1,443

Cash Flows from Investing Activities

Earnings from restricted investments                                         $   350                            $350

Increase in sinking fund                                                                   (300)                           (280)

Net cash from investing activities                                                   $50                                $70                                                     

Cash Flows from Financing Activities

Payments of mortgage principal                                                       $(2,000)                 $(1,800)

Borrowing from bank                                                                                    500                                0

Net cash used for financing activities                                             $(1,500)                $(1,800)

Net Increase/(Decrease) in Cash                                                       $ (389)                   $ (287)

Cash, Beginning of Year                                                                                539                          826

Cash, End of Year                                                                                        $    150                      $ 539

(Note that parentheses on a financial statement indicate a subtraction or negative number.)

Answer 1

The organization is generating cash from the following sources:

(a) Collections from patients and third-party payers (this is the most important source)

(b) Collections from other operating activities (second most important source)

(a) & (b) are the core operating activities that generate cash for the organization. (a) A hospital earns from the fee it charges from its patients.

(c) Earnings from restricted investments

(c) This cash flow inflow is from financial investments the company has made (like shares or bonds). It is also possible that the company might be selling the financial investments it made to generate cash.