MHA 706 Module 3 Quiz Questions with Complete Solutions Graded A+

  assesses if the business using the right mix of debt and equity - Answer: Debt management ratio assesses if the business can meet its cash obligations - Answer: Liquidity Ratio assesses if the business have the right amount of assets for its patient volume - Answer: Assets Management Ratio assesses if the business is generating sufficient profits - Answer: Profitability allows you to examine changes in the financial statement Year over Year - Answer: Percentage Change Analysis summarizes & highlights an organization's financial condition - Answer: DuPont Analysis process of comparing a business's performance to selected industry standards - Answer: Benchmarking focuses on operating data as compared to financial statement data - Answer: Operating Indicator Analysis Days cash on hand (DCOH) - Answer: liquidity ratio Operating Margin (OM) - Answer: profitability ratio Debt Ratio - Answer: capitalization ratio Times Interest Earned (TIE) - Answer: coverage ration inpatient profit/ total discharges - Answer: Profit per discharge inpatient days/ (number of licensed beds x 365) - Answer: Occupancy Rate total salaries/ total full time equivalents - Answer: Salary per full time equivalent (FTE) inpatient days/total discharges - Answer: Average length of stay According to DuPont analysis, ROE can be calculated as the product of what three financial ratios? - Answer: a. Equity multiplier b. Total asset turnover c. Total margin What are the limitations associated with financial condition analysis? - Answer: a. Different operating and accounting practices can distort comparisons b. Seasonal factors can distort ratios c. Sometimes hard to tell is a given ratio is 'good' or 'bad' What financial statement can best show an organization's operations in regards to liquidity? - Answer: cash budget = net income/ total revenue - Answer: Total margin = net income/ total assets - Answer: Return on assets cost are dependent on volume - Answer: variable costs all cost are variable - Answer: long-run cost are partially depend on volume - Answer: semi-fixed costs that are independent of volume - Answer: fixed cost Possible negative outcomes with capitation - Answer: providers may have a perverse incentive utilization (making it harder to access care) With capitation provider's financial risk is minimized if all cost are - Answer: fixed With fee-for-service (volume-based) provider's financial risk is minimized if all cost are - Answer: variable Possible negative outcomes with fee-for-service - Answer: providers may have perverse incentive to induce demand (providing more services/test than medically necessary) Break-even volume is defined as the volume needed for an organization (or service or program) to be financially self-sufficient. There are two types of break-even conditions. - Answer: accounting break-even economic break-even In the video, what were the two ways that capitation was explored via graphical analysis? - Answer: Utilization/membership The contribution margin (CM) is defined as the difference between Per Visit (Unit) Revenue and - Answer: variable cost rate Cost-volume profit (CVP) analysis is also called: - Answer: Profit Analysis T/F: Accounting Break-even formula: Total Revenues - Total Variable Cost - Fixed Cost = $0 - Answer: TRUE T/F: Cost measurement is a critical part of manager accounting. - Answer: TRUE