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Summary MHA 5001 Unit V Essay Vu Minh Duy.docx MHA5001 Short-term Debt Financing Options Columbia Southern University MHA5001 HealthCareFinancial Management Introduction To ensure the business run efficiently, companies must have sufficient worki
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MHA 5001 Unit V Essay Vu Minh D MHA5001 Short-term Debt Financing Options Columbia Southern University MHA5001 HealthCareFinancial Management Introduction To ensure the business run efficiently, companies must have sufficient working capital. Otherwise, they have to look at interna...
mha 5001 unit v essay vu minh duydocx mha5001 short term debt financing options columbia southern university mha5001 healthcarefinancial management introduction to ensure the busines
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MHA5001
Short-term Debt Financing Options
Columbia Southern University
MHA5001 HealthCareFinancial Management
Introduction
To ensure the business run efficiently, companies must have sufficient working capital.
Otherwise, they have to look at internal or external financial resources. Generally, firms prefer
raising capital internally from retained earnings, followed by debt, and finally from issuing new
equity (Nguyen, 2019). Meanwhile, on an average, a healthcare organization finance its assets
with 5% short-term debt, 30% long-term debt, and 65% equity as measure by balance sheet
(Luis
& Kristin, 2016). It can be seen that short-term debt financing is an important part of financial
governance in an organization. This paper introduces Novartis – a pharmaceutical giant with
a potential working capital deficit and short-term debt issue.
An Overview of Novartis’ Financial Situation in 2020
Novartis AG is a Swiss corporation, established on December 20, 1996 following the
merge between Ciba-Geigy AG and Sandoz AG. The Basel-headquartered company is
employing more than 100,000 full-time associates worldwide and its products are present in
approximately 155 countries in the world. It comprises two global operating divisions:
Innovative Medicines for patent-protected medicines and Sandoz for genetic
pharmaceuticals and biosimilars. In 2020, Novartis recognized a net sale of USD 48.7 billion
and net income from operating activities of USD 8.1 billion. It ranked on top five global
pharmaceutical companies in term of revenue.
In 2020, the Covid-19 pandemic negatively impacted Novartis’ sales in many
geographies and therapeutic areas, particularly in opthalmology, dermatology, and Sandoz
businesses. The Innovative Medicines division only recorded 3% increase in net sales while
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