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
Question 2.2. 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
What is the net income for the period?
$150,000
$50,000
$500,000
$850,000
Question 3.3. A hospital issues $20 million in bonds and $60 million in equity to finance a new project. Its targeted debt to equity ratio is:
50%
33%
200%
300%
Question 4.4. Which of the following statements about accounts receivable and inventory is true?
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
Question 5.5. 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
Question 6.6. 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
Question 7.7. 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.
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?
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).
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.