Chapter 8 Hsmg 303

20 Questions | Total Attempts: 674

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Technology Quizzes & Trivia

Questions and Answers
  • 1. 
    Working capital is defined as the   
    • A. 

      total amount of functioning equipment in a healthcare organization

    • B. 

      total amount of equipment dedicated to providing patient care

    • C. 

      Sum of a healthcare organization's investment in current assets

    • D. 

      Sum of a healthcare organization's investment in outside endeavors

  • 2. 
    Examples of current assets include 
    • A. 

      inventories

    • B. 

      prepaid expenses

    • C. 

      salaries and wages

    • D. 

      (a) and (b)

  • 3. 
    Liquidity refers to 
    • A. 

      How quickly an asset can be converted into cash

    • B. 

      how quickly a liability can be paid off

    • C. 

      the rate at which a healthcare organization disbursesits cash

    • D. 

      the rate at which a hospital sells its current assets

  • 4. 
    What are the advantages of having sufficient working capital on hand? 
    • A. 

      Organizations are able to pay their employees and vendors on time, thereby maintaining a positive relationship.

    • B. 

      Organizations have sufficient resources to repay loans and are therefore creditworthy.

    • C. 

      Both of the above

    • D. 

      None of the above

  • 5. 
    Where does initial working capital for not-for-profit healthcare organizations come from? 
    • A. 

      A governmental entity through taxes and bonds

    • B. 

      Philanthropy or tax-exempt bonds

    • C. 

      The sale of stock

    • D. 

      The state legislature

  • 6. 
    Where does initial working capital for for-profit healthcare organizations come from? 
    • A. 

      The sale of stock

    • B. 

      Philanthropy or tax exempt bonds

    • C. 

      The state legislature

    • D. 

      A governmental entity, in the form of taxes and

  • 7. 
    Sources of temporary working capital include 
    • A. 

      Trade credit

    • B. 

      equity

    • C. 

      Deb

    • D. 

      all of the above

  • 8. 
    An organization using trade credits to finance temporary working capital is essentially 
    • A. 

      Borrowing money from a loan company to finance the purchase of the working capital

    • B. 

      Borrowing money from a vendor by delaying payment to the vendor for goods or services already received

    • C. 

      Using donated money to finance working capital needs

    • D. 

      None of the above

  • 9. 
    What does the term “5-15, net 30” mean? 
    • A. 

      An organization can receive a 5 percent discount if it pays within 15 days.

    • B. 

      An organization can receive a 15 percent discount if it pays within 5 days.

    • C. 

      An organization can receive a 30 percent discount if it pays between days 5 and 15.

    • D. 

      If an organization pays on day 30, it can receive a discount of 5 to 15 percent.

  • 10. 
    What are cash flows? 
    • A. 

      The difference between the amount of money used internally and the amount of money used for external endeavors

    • B. 

      The difference between liabilities paid in cash and liabilities financed with equity

    • C. 

      The difference between cash receipts and cash disbursements

    • D. 

      None of the above

  • 11. 
    Why do healthcare organizations keep cash on hand? 
    • A. 

      For the expected demand to pay employees and vendors in cash    

    • B. 

      For emergencies and unexpected purchases

    • C. 

      For the unexpected demand for cash when a vendor offers a price reduction the organization does not want to pass up    

    • D. 

       All of the above

  • 12. 
    Compounding is a mechanism used to    
    • A. 

      Consolidate current assets 

    • B. 

      Determine the amount of income that investments will generate    

    • C. 

       determine the amount of income that trade credits will save organizations    

    • D. 

      Convert current assets into cash    

  • 13. 
    Horizontal analysis is a method of reviewing financial performance by 
    • A. 

      Evaluating line items by looking at percentage changes over time  

    • B. 

      Comparing important line items to a base number

    • C. 

      computing and showing relationships between important line items  

    • D. 

      None of the above

  • 14. 
    Vertical analysis is a method of reviewing financial performance by 
    • A. 

      Computing and showing relationships between important line items    

    • B. 

      Comparing important line items to a base number    

    • C. 

      Evaluating line items by looking at percentage changes over time

    • D. 

      None of the above

  • 15. 
    The average payment period ratio indicates
    • A. 

      How long an organization could meet its obligations if cash receipts were discontinued    

    • B. 

      an organization's ability to meet its financial obligations    

    • C. 

      the average amount of time that passes before a current liability is paid    

    • D. 

      The average amount of time an insurance company takes to pay a claim

  • 16. 
    The current ratio indicates
    • A. 

      the average amount of time an insurance company takes to pay a claim    

    • B. 

      The average amount of time that passes before a current liability is paid    

    • C. 

      how long an organization could meet its obligations if cash receipts were discontinued

    • D. 

      an organization's ability to meet its financial obligations

  • 17. 
    XYZ Rehabilitation Center borrows $250,000 for three months at a 5 percent annual interest rate. How much interest will XYZ Rehabilitation Center pay for the loan?
    • A. 

      $3,125    

    • B. 

      $12,500    

    • C. 

      $62,500    

    • D. 

      $4,230

  • 18. 
    Sunshine Clinic purchases a piece of equipment for $250 with a 2–15 net 30 provision. What is the effective interest rate if the clinic pays on day 16? And on day 30. 
    • A. 

      146 percent on day 16; 9.7 percent on day 30

    • B. 

      744.9 percent on day 16; 30.6 percent on day 30

    • C. 

      292 percent on day 16; 9.7 percent on day 30

    • D. 

      146 percent on day 16; 19.5 percent on day 30

  • 19. 
    ABC Physical Therapy Clinic wants to invest $500,000. What is the future value of the investment compounded annually at 9 percent for ten years? 
    • A. 

      $545,000.00

    • B. 

      $2,082,205.50

    • C. 

      $776,485.15

    • D. 

      $1,296,871.23 

  • 20. 
    The cash conversion cycle is 
    • A. 

      The time is will take a hospital to build a building using cash.

    • B. 

      The period is takes the CFO to close the financial accounting records.

    • C. 

      The process of converting resources represented by cash outflows into services and products represented by cash inflows.    

    • D. 

      The process of converting accounts receivable into money in the bank. 

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