Author Question: Sandra McCloud, a finance major in her last term of college, is currently scheduling her placement ... (Read 246 times)

B

  • Hero Member
  • *****
  • Posts: 570

  Sandra McCloud, a finance major in her last term of college, is currently scheduling her placement interviews through the university's career resource center. Her list of companies is typical of most finance majors: several commercial banks, a few industrial firms, and one brokerage house. However, she noticed that a representative of a not-for-profit hospital is scheduling interviews next week, and the position--that of financial analyst--appears to be exactly what Sandra has in mind. Sandra wants to sign up for an interview, but she is concerned that she knows nothing about not-for-profit organizations and how they differ from the investor-owned firms that she has learned about in her finance classes. In spite of her worries, Sandra scheduled an appointment with the hospital representative, and she now wants to learn more about not-for-profit businesses before the interview.
  To begin the learning process, Sandra drew up the following set of questions. See if you can help her answer them.
  First, consider some basic background information concerning the differences between not-for-profit organizations and investor-owned firms.
  What impact does the inability to issue common stock have on a not-for-profit business's capital structure and capital budgeting decisions?
 


Question 2


  Sandra McCloud, a finance major in her last term of college, is currently scheduling her placement interviews through the university's career resource center. Her list of companies is typical of most finance majors: several commercial banks, a few industrial firms, and one brokerage house. However, she noticed that a representative of a not-for-profit hospital is scheduling interviews next week, and the position--that of financial analyst--appears to be exactly what Sandra has in mind. Sandra wants to sign up for an interview, but she is concerned that she knows nothing about not-for-profit organizations and how they differ from the investor-owned firms that she has learned about in her finance classes. In spite of her worries, Sandra scheduled an appointment with the hospital representative, and she now wants to learn more about not-for-profit businesses before the interview.
  To begin the learning process, Sandra drew up the following set of questions. See if you can help her answer them.
  First, consider some basic background information concerning the differences between not-for-profit organizations and investor-owned firms.
  What are a not-for-profit business's sources of fund capital?
 



bigsis44

  • Sr. Member
  • ****
  • Posts: 317
Answer to Question 1

The inability to issue common stock has a significant impact on a not-for-profit firm's financial flexibility. First, the lack of access to equity capital effectively imposes capital rationing, so the firm may not be able to undertake all projects deemed worthwhile. Second, in order to invest in projects considered necessary, the firm may have to take on more than the optimal amount of debt capital.

Answer to Question 2

The three major sources of fund capital are (1) the excess of revenues over expenses (retentions), (2) charitable contributions, and (3) government grants.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

When blood is exposed to air, it clots. Heparin allows the blood to come in direct contact with air without clotting.

Did you know?

Symptoms of kidney problems include a loss of appetite, back pain (which may be sudden and intense), chills, abdominal pain, fluid retention, nausea, the urge to urinate, vomiting, and fever.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

For a complete list of videos, visit our video library