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WEEK 1 CheckPoint The Four Cí»s and Five Pillars

WEEK 1 CheckPoint The Four Cí»s and Five Pillars

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WEEK 1 CheckPoint The Four Cí»s and Five Pillars
WEEK 1 CheckPoint The Four Cí»s and Five Pillars

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Published by: sedgewic on Jul 07, 2011
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Axia College Material

Appendix B The Four C’s and Five Pillars
Guidelines See the vocabulary index of the financial management theory of the healthcare establishments, check out chapter 1 and all other accessible literature on this topic to help you fill the table 1 and table 2 given below. Give explanation of each term and elaborate it with the help of a real life instance of other than health care field.

Part I: The Four C’s Term Cost Elaboration The level of finances, time and other resource usage that is linked to any purchase transaction or other activities. The currency, items or other things that can be utilized to raise revenues or finance for buying of assets. The amount of money or coins held by an entity. Real-life example The utility bills that are paid periodically serve to keep and maintain good environments and they are a sort of cost. A debt taken to buy a thing like a vehicle or office equipment.



A person can use cash to make payments related to household purchases at some super mart. Companies use cash or currency to buy assets or pay salaries to the human resources. Cash is also utilized to pay for other expenditures like utility charges, rental etc.
HCA 270

Risk aversion It is an attitude that dislikes uncertainty and allows an individual to go for an investment that is less uncertain and with lower payoffs than for the one that is more uncertain with possibly high returns. And to conserve something is an intelligent act of investment most of the times. Part II: The Five Pillars of Financial management Term Cash flows Elaboration It is the assessment of an organization's financial performance and denotes to the cash whose amount enhances with the passage of time. It is same as a saving account is in place to keep money in it for future use and that money will not be wasted rather it is conserved. Maximizing behavior An elaboration of this behavior can be of an investor who invests in a more risky stock that is expected to yield higher returns than of one who invests in a less risky bond that has a low level of return expected with it. HCA 270 . It is a set of all those activities that are aimed at yielding profits at the expense of risk. A person who is risk averse will like to keep his money in a bank account with sure return in the form of interest rather than invest it in any bond that offers more return but at the risk of loss of money.Conservation It is the responsibility to save and protect the asset foundations of a company. Real-life example It can be a debt or a credit whose value changes with the passage of time because of interest.

If a person is supposed to get a $100 amount today and if he keeps it in bank that offers 5% interest rate than the same $100 will be worth $ 105 a year later that will be greater amount of cash than $100 given to the person at that very day. It can be elaborated by taking an example of a person who sales his stock at today's rather than the possibility of selling the same stock at high price in some future. Opportunity cost It is the cost of best alternative forgone in relation to any decision.Time value of money It is basically an idea that the cash held today is of more worth than the same amount of cash that will be held at any time in future. HCA 270 . The $100 given a year later was unable to accrue any interest. purchase or sale transaction etc. The opportunity cost in this case will be the amount of lesser profits being deducted from the profits that would have been generated by selling at higher price at some future point of time.

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