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You are at a seminar with other attendees representing various types of healthcare organizations. After dinner,...

You are at a seminar with other attendees representing various types of healthcare organizations. After dinner, you are chatting with several of your fellow attendees and discussing who has it easier for raising capital, not-for-profit organizations or for-profit organizations. What comments do you have?

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Answer #1

For profit organizations are able to raise capital more easily. They have the funds to issue an attractive prospectus and to advertise their equity issue. They are able to raise debt also more quickly. This is because they are profitable ventures and the lenders are assured of the safety of their investment. Hence the lenders are not reluctant to give the loans. Instead in case of non profit firms the lenders are not willing to give the loans because the firms may not be able to earn enough to be able to repay their loans.

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