Week 9 Discussion 1 and 2

[Name of the institute]Week 9 Discussion 1 and 2

Create an argument for a publically traded health care organization to issue stocks or bonds as part of its capital structure. Provide support for your position. 

Capital structure is all about how a firm chooses to finance all its operations with the usage of its different resources of funds. In the strategic financial plan of a hospital, deciding the capital structure is an important component. Rating of bonds, cash availability, and bond insurance can affect the decision whether to issue stocks and bonds. For a publicly healthcare organization the capital structure should be in proportion of sixty is to forty 60:40. This means that 60% stocks should be issues and 40% bonds should be issued. More percentage is allocated to the issuance of stock is that it involves less risk as compared to the issuance of bonds. When stocks are issued the organization covers all its expenditures first and the remainder amount is distributed among the stockholders whereas, in bonds, a fixed amount is set which needs to be given to bond holders despite the profit or loss of the organization. For a public health to are organization it is essential that it should cover all its expenses first and then distributes the remainder amount among the stakeholders. Public healthcare sector is not in good conditions so the profit level remains in fluctuation so relying on bonds may not be a good policy.

Imagine that a publicly traded health care organization has just experienced a downgrade in its credit rating from a rating agency, such as Moody's or Standard & Poor's. Determine the most likely impact that this event would have on the publically traded health care organization. Indicate an approach that management could take to minimize the impact ...