MHA 706 FINAL EXAM AND STUDY GUIDE- LORD
NEWEST 2026 TEST BANK| LSUS MHA 706 FINANCIAL
MANAGEMENT FINAL REVIEW WITH COMPLETE
REAL EXAM QUESTIONS AND CORRECT VERIFIED
ANSWERS/ ALREADY GRADED A+ (MOST RECENT!!)
A hospital is evaluating two capital projects with identical initial costs
but differing cash inflows. Project A has higher early inflows while
Project B has higher later inflows. If the hospital’s cost of capital
increases significantly, which project is favored and why?
A. Project A because early cash flows reduce discounting impact
B. Project B because long-term inflows increase NPV
C. Both equally viable under higher discount rate
D. Neither project is viable under any rate increase - Correct Answer - A
Higher discount rates reduce present value of distant cash flows,
favoring earlier inflows.
A healthcare system experiences declining operating margins despite
stable revenue. Which financial ratio would best diagnose the underlying
issue?
A. Current ratio
B. Operating margin ratio
C. Debt-to-equity ratio
D. Asset turnover ratio - Correct Answer - B
Operating margin directly measures profitability from core operations.
pg. 1
,A hospital CFO wants to improve liquidity without affecting
profitability. Which action is most appropriate?
A. Increase long-term debt
B. Decrease accounts payable turnover
C. Accelerate accounts receivable collection
D. Purchase fixed assets on credit - Correct Answer - C
A nonprofit hospital is deciding between bond financing and equity
grants. What is the key financial advantage of bond financing?
A. No repayment obligation
B. Tax deductibility of interest
C. No financial risk
D. Immediate ownership dilution - Correct Answer - B
A hospital’s break-even point increases significantly. What is the most
likely cause?
A. Decrease in fixed costs
B. Increase in variable costs
C. Increase in selling price
D. Increase in contribution margin - Correct Answer - B
A healthcare organization evaluates NPV for two projects. One has a
positive NPV but higher risk variance. What should management
consider?
A. Reject both projects
B. Accept based solely on NPV
pg. 2
,C. Adjust discount rate for risk
D. Ignore risk if NPV is positive - Correct Answer - C
Risk-adjusted discounting aligns valuation with uncertainty.
A hospital is using ABC costing. Which department would most likely
show increased allocated costs?
A. Administrative services
B. High-volume outpatient clinic
C. Low-volume specialized surgery unit
D. Emergency triage - Correct Answer - C
ABC assigns higher overhead to resource-intensive low-volume
services.
A CFO notices cash flow is positive but net income is negative. What is
the most likely explanation?
A. High depreciation expenses
B. Low revenue
C. Excess liabilities
D. Poor liquidity management - Correct Answer - A
Non-cash expenses like depreciation reduce net income without
affecting cash.
A hospital CFO is evaluating a proposed expansion of outpatient
imaging services. The projected cash inflows are uncertain due to payer
mix shifts toward Medicare Advantage. What financial metric best
captures project viability under risk-adjusted conditions?
pg. 3
, A. Payback Period
B. Net Present Value (NPV) with risk-adjusted discount rate
C. Accounting Profit
D. Gross Revenue Margin - Correct Answer - B
A hospital's payer mix shifts toward Medicare and Medicaid, reducing
reimbursement rates. Which financial metric is most directly impacted?
A. Gross revenue per patient
B. Operating margin
C. Days cash on hand
D. Inventory turnover – Correct Answer - B
A healthcare system faces inflationary pressure on supplies. What is the
most effective financial hedge?
A. Increase fixed asset investment
B. Lock in long-term supplier contracts
C. Reduce patient volume
D. Increase debt financing - Correct Answer - B
A health system is evaluating a capital project with uneven annual cash
flows. The discount rate increases due to rising bond yields. What is the
most immediate effect on the project’s net present value (NPV)?
A. NPV increases
B. NPV decreases
C. NPV remains unchanged
D. Payback period shortens - Correct Answer - B
pg. 4
NEWEST 2026 TEST BANK| LSUS MHA 706 FINANCIAL
MANAGEMENT FINAL REVIEW WITH COMPLETE
REAL EXAM QUESTIONS AND CORRECT VERIFIED
ANSWERS/ ALREADY GRADED A+ (MOST RECENT!!)
A hospital is evaluating two capital projects with identical initial costs
but differing cash inflows. Project A has higher early inflows while
Project B has higher later inflows. If the hospital’s cost of capital
increases significantly, which project is favored and why?
A. Project A because early cash flows reduce discounting impact
B. Project B because long-term inflows increase NPV
C. Both equally viable under higher discount rate
D. Neither project is viable under any rate increase - Correct Answer - A
Higher discount rates reduce present value of distant cash flows,
favoring earlier inflows.
A healthcare system experiences declining operating margins despite
stable revenue. Which financial ratio would best diagnose the underlying
issue?
A. Current ratio
B. Operating margin ratio
C. Debt-to-equity ratio
D. Asset turnover ratio - Correct Answer - B
Operating margin directly measures profitability from core operations.
pg. 1
,A hospital CFO wants to improve liquidity without affecting
profitability. Which action is most appropriate?
A. Increase long-term debt
B. Decrease accounts payable turnover
C. Accelerate accounts receivable collection
D. Purchase fixed assets on credit - Correct Answer - C
A nonprofit hospital is deciding between bond financing and equity
grants. What is the key financial advantage of bond financing?
A. No repayment obligation
B. Tax deductibility of interest
C. No financial risk
D. Immediate ownership dilution - Correct Answer - B
A hospital’s break-even point increases significantly. What is the most
likely cause?
A. Decrease in fixed costs
B. Increase in variable costs
C. Increase in selling price
D. Increase in contribution margin - Correct Answer - B
A healthcare organization evaluates NPV for two projects. One has a
positive NPV but higher risk variance. What should management
consider?
A. Reject both projects
B. Accept based solely on NPV
pg. 2
,C. Adjust discount rate for risk
D. Ignore risk if NPV is positive - Correct Answer - C
Risk-adjusted discounting aligns valuation with uncertainty.
A hospital is using ABC costing. Which department would most likely
show increased allocated costs?
A. Administrative services
B. High-volume outpatient clinic
C. Low-volume specialized surgery unit
D. Emergency triage - Correct Answer - C
ABC assigns higher overhead to resource-intensive low-volume
services.
A CFO notices cash flow is positive but net income is negative. What is
the most likely explanation?
A. High depreciation expenses
B. Low revenue
C. Excess liabilities
D. Poor liquidity management - Correct Answer - A
Non-cash expenses like depreciation reduce net income without
affecting cash.
A hospital CFO is evaluating a proposed expansion of outpatient
imaging services. The projected cash inflows are uncertain due to payer
mix shifts toward Medicare Advantage. What financial metric best
captures project viability under risk-adjusted conditions?
pg. 3
, A. Payback Period
B. Net Present Value (NPV) with risk-adjusted discount rate
C. Accounting Profit
D. Gross Revenue Margin - Correct Answer - B
A hospital's payer mix shifts toward Medicare and Medicaid, reducing
reimbursement rates. Which financial metric is most directly impacted?
A. Gross revenue per patient
B. Operating margin
C. Days cash on hand
D. Inventory turnover – Correct Answer - B
A healthcare system faces inflationary pressure on supplies. What is the
most effective financial hedge?
A. Increase fixed asset investment
B. Lock in long-term supplier contracts
C. Reduce patient volume
D. Increase debt financing - Correct Answer - B
A health system is evaluating a capital project with uneven annual cash
flows. The discount rate increases due to rising bond yields. What is the
most immediate effect on the project’s net present value (NPV)?
A. NPV increases
B. NPV decreases
C. NPV remains unchanged
D. Payback period shortens - Correct Answer - B
pg. 4
