Question

Which is the BEST method of increasing a facility's cash position?

1. Issuing shares of stock
2. Increasing the census
3. Admitting more Medicare residents
4. Collecting accounts receivables

Answer 1

When a firm needs to raise funds for a major expansion, it can choose between issuing stock or borrowing money. Issuing stock involves selling company ownership to the public, while borrowing involves committing to scheduled interest payments. Both options have advantages and disadvantages.

Step-by-step explanation:

When a firm needs a surge of financial capital to carry out a major expansion, it can choose to raise funds through issuing stock or borrowing. Issuing stock involves selling off company ownership to the public and becoming responsible to a board of directors and shareholders. This can be a good option if the firm wants to maintain control of its operations and avoid scheduled interest payments. On the other hand, borrowing money from a bank or issuing bonds involves committing to scheduled interest payments, but the firm retains control of its operations and isn't subject to shareholders.