Discussion 1

Discussion 1: Financial Statements

Checklist items: Discuss the following:

If your best friend came to you and said that their business was doing poorly and you looked over their business and saw the information (in the scenario below), what would you advise him or her and explain why.

Scenario: Your best friend works for an In-Home Health Provider Company (IHHPC) in Palm Beach County, Florida. Your friend comes to you and explains that the In-Home Health Provider Co. wants to expand the next year to Broward County and Dade County. Your friend explains the company is dealing with a cash flow problem and if it is not figured out over the next six months the IHHPC will not meet the asset requirement for the expansion loan. IHHPC Revenue:

·         80% private pay patients.

·         10% Health insurance.

·         10% Long Term Care Insurance Policy.

Process at IHHPC: Your friend explains this is how the IHHPC works. A patient would call in and request a nurse for eight hours, seven days a week, starting the next day. The company would send the nurse the next day, then bill the patient on a weekly cycle. The IHHPC would mail a statement to the patient at the end of the first week of service. By the time the patient would get around to writing a check, and mailing it back in to the IHHPC, sometimes the company would not receive payment for six to eight weeks. The company would be paying the nurse weekly although not receiving payment for services yet.

What would you advise him or her and explain why?

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