Reference no: EM13789814

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:

• 50%
• 33%
• 200%
• 300%

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.