Health Care Accounting

Health Care Accounting

Investing in Stocks and Bonds

One of the most viable investment options for a business is to invest in stocks and bonds. Bonds and stocks are distinct investment options, but the two are grouped together in financial circles. Firstly, buying a share of stock refers to owning a stake in a company (Kimmel et al., 2017). If the performance and profits of a company improve, stock prices increase; hence, an investor can sell their stake at a profit. On the other hand, bonds are like loans given to businesses (Kimmel et al., 2017). Once it matures, the borrower pays back the principal amount plus interest. The two investment options are secure and appropriate for high-value investments.

Considerations before Investing       

Before investing in stocks and bonds, a critical consideration is to look at the expected returns. The returns can be in interest payment, dividends, or capital gain. The company can make a move if the returns exceed the monetary and time investment. Also, the business should consider the liquidity of an investment. For instance, a company that has invested in stocks must be able to convert the shares into cash quickly.

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Financial Statement to be Used

Profitability ratios are some of the most useful statements used before making an investment decision. Profitability ratios are particularly used to determine the performance trend in the respective company (Maverick, 2019). If the company shows a consistent profitability trend, then it is worth investing in.

Why a Healthcare Organization Should Invest in Stocks and Bonds  

The major reason why healthcare facilities need to invest in bonds and stocks is that the investment option offers financial security (Kimmel et al., 2017). Besides, this option offers the most stable and highest income streams. For instance, the bond market is so diverse that a company can adjust its portfolio to attain its income needs.

References

Kimmel, P. D., Weygandt, J. J., Kieso, D. E., Trenholm, B., Irvine, W., & Burnley, C. D. (2017). Financial accounting: tools for business decision-making. John Wiley & Sons Canada, Ltd.

Maverick, J. B. (2019). Why Do Shareholders Need Financial Statements? Investopedia. https://www.investopedia.com/ask/answers/032615/why-do-shareholders-need-financial-statements.asp.

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Businesses often use their profits (cash assets or revenue) to expand their portfolios, such as investments, which may include stocks, bonds, and capital expenditures. This can be used to increase revenue streams. They also invest for protection purposes, so they don’t have all of their money invested in 1 place. According to Accounting, there are several reasons why a business must practice sound financial management when using its profits.

Health Care Accounting

Select 1 of the business investment options below to use for this discussion:

Investing in stocks and bonds
Investing in other businesses or mergers
Expanding services (e.g., ambulatory care center, home health agency, or buying a physician practice)
Purchasing capital expenditures (e.g., MRI, PET Scan, electronic medical records system, or other large purchases)

Using your selected business investment option, respond to the following in a minimum of 175 words:

Explain the investment option.
Discuss what you might need to do during your analysis to decide to invest using the selected option.
Identify the financial statement you would use to help you make the decision.
Provide a rationale for why you think the healthcare organization would benefit from using its cash assets to invest in the option you selected.