KTM Regional Hospital, is a public referral hospital under Ghana Health Services established in 1980. The hospital is a sub-vented organisation that finances its operations from Internally Generated Revenues (IGR) and government subventions. In order to forecast for the first quarter of 2017, you are provided with the following information on revenues and expenditure projections of the Hospital for the fourth quarter of 2016 and first quarter of 2017.

Additional useful information for the forecasting exercise.
1) The cash and bank balance of the Hospital as at December 2016 was a deficit of GH¢500,000.
2) The breakdown of the IGR is as follows:

• National Health Insurance Customers constitute 60% of the IGR, who are expected to pay their claims two months after service has been rendered.
• Corporate customers constitute 20% of the IGR. They are granted one-month credit term.
• Cash Customers constitute remaining 20% of the IGR.

3) The experience shows that the government subvention for each quarter is actually released in two equal instalments in the second and third month of that quarter respectively.
4) The donations are from creditable partners so they are always received on time. However, the donation for March 2017 amounting to GH¢900,000 will be received 40% in cash and 60% in kind.
5) Non-established post refers to wages and salaries paid to casual workers and those on contract appointment. They are paid in the month in which they are incurred.
6) Goods and service will be paid for as follows: 40% in the month it was incurred and 60% one month in arrears.
7) Non-financial assets bought are paid for in FOUR equal instalments, starting from the month in which the asset was bought. Consumption of fixed capital is to be charged at 20% annually.
8) Other expenses are paid for as and when incurred.

Required:
i) Prepare a cash forecast for the Hospital for the first quarter of 2017, showing the forecast for each month and that of the quarter as a whole.                                                                                                                                                            (12 marks)

ii) On the basis of the cash forecast in (i) above, advise management on the financing options available to them for the 2017 fiscal year.                                                                                                                                                                          (4 marks)