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 additio

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1. Aggressive working capital policy: (Points : 5)       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

What is the net income for the period? (Points : 5)

      $150,000

      $50,000

      $500,000

      $850,000



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: (Points : 5)

      50%

      33%

      200%

      300%



4. Which of the following statements about accounts receivable and inventory is true? (Points : 5)

      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: (Points : 5)

      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: (Points : 5)

      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 total dollar contribution margin dollars and percentage. (Points : 15)

      

      228,875

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? (Points : 15)

      

      

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? (Points : 20)
 
10. Provide an example of a financial report and then explain in detail the steps in the financial analysis process. (Points : 20)
 

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
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