Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications, 3rd Edition

8

CAPITAL FINANCING FOR HEALTH CARE PROVIDERS

LEARNING OBJECTIVES

• Describe the types of equity and debt financing

• Define various bond terminology

• Compare tax-exempt with taxable financing

• Explain lease financing

In Chapters Two and Three, the basic accounting equation was defined as Assets = Liabilities + Net Assets. Because liabilities are debts and net assets represent the community’s equity in a not-for-profit health care organization, in terms of the sources of financing, the basic accounting equation can also be thought of as

Assets = Debt + Equity

The equation shows that any increase in assets must be balanced by a similar increase in debt, equity or both. The structuring of debt relative to equity is called the capital structure ...