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

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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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