1) Aggressive working capital policy
- May increase the entity's return, but it also increases the risk
- Calls for maintaining high cash balances on hand
- Leads to increased interest costs incurred by having to take on additional debt to meet short-term obligations
- All of the above
2) A firm has the following accounts:
Net patient revenue = $1,500,000
Supply expense = $200,000
Depreciation expense = $100,000
Salaries and benefits = $700,000
Other expenses = $200,000
Net accounts receivable = $150,000
3) A hospital issues $20 million in bonds and $60 million in equity to finance a new project. Its targeted debt to equity ratio is:
4) They are both considered current assets
- They are both considered expenses
- They are both excluded from current assets
- They are both considered current liabilities
- Total revenue outpaces total avoidable fixed costs
5) The breakeven point occurs where:
- Total fixed costs and total revenue intersect
- Revenue minus variable cost minus fixed cost = 0
- Total profit margin and total costs intersect
- Total variable costs and total revenue intersect
- Total revenue outpaces total avoidable fixed costs
6) A statement that reports the revenues minus expenses of an entity is called:
- Income statement
- Statement of retained earnings
- Balance sheet
- Report of management
- Statement of cash flows
7) An imaging center has the following information:
- Revenue per test: $225
- Variable cost per test: $150
- Total fixed costs: $225,000
- Estimated number of tests = 3,500
Calculate the a) Contribution Margin; b) Total dollar contribution margin; and, c) Contribution Margin percentage. Show Formula and Math
8) Your hospital has the following revenue for the months of July-September: July $3,000,000 August $2,500,000 September $4,000,000. If 30% of the month's revenue is collected in the same month, 40% is collected in the second month and 30% is collected in the third month, how much of July's revenue is collected in August? .Show Formula and Math
9) Accounts receivables can constitute more than 50% of a healthcare organization's current assets. Managing accounts receivables is critical to the cash flow of the organization. If you were a billing manager what should you consider when implementing credit and collection policies? (Hint: Provide an example of a financial report then explain in detail the steps in the financial analysis process).
Show Formula and Math
10) Provide an example of a financial report and then explain in detail the steps in the financial analysis process.
11) A competitive hospital maintains current equipment and purchases new in order to stay current with the latest technology. If you were evaluating the capital budget performance of a hospital what factors would you consider justifying taking on more debt to purchase new equipment for a surgical unit?
12) Explain in detail some of the biggest environmental challenges of the future for healthcare financial managers.