Healthcare Finance, Exam 3
capital budgeting - correct answer ✔✔the analysis of potential additions to a business's fixed assets
Capital budgeting decisions: - correct answer ✔✔typically are LT in nature, often involve large
expenditures & usually define strategic direction
capital budgeting decisions are very -- to businesses - correct answer ✔✔important
proposed projects are classified according to -- and --(cost) - correct answer ✔✔purpose, size
for investor-owned businesses financial analysis identifies - correct answer ✔✔those projects that are
expected to contribute to shareholder wealth
for not-for-profit businesses, financial analysis indentifies - correct answer ✔✔a projects expected effect
on the business's financial condition
overview of capital budgeting financial analysis - correct answer ✔✔1. estimate the projects cash flows
2. assess the projects riskiness 3. estimate the project cost of capital 4. measure the financial impact
Identifying the relevant cash flows - correct answer ✔✔inc CF=CF(w/ project) - CF(w/o project)
Financial management provides the theories, concepts, and tools necessary to help managers make
better financial decisions.
a. True
b. False - correct answer ✔✔
Which of the following is not a finance activity?
a. Evaluation and planning
, b. Financing decisions
c. Long-term investment decisions
d. Financial risk management e. Facilities management - correct answer ✔✔
Because for-profit and not-for-profit organizations have different financial goals, the finance function is
totally different between these two forms of ownership.
a. True
b. False - correct answer ✔✔
Which of the following statements about organizational stakeholders is most correct?
a. All businesses have stakeholders.
b. Only for-profit businesses have stakeholders.
c. Only not-for-businesses have stakeholders.
d. Not-for-profit and for-profit businesses each have stakeholders, but they are completely different
parties.
e. In for-profit businesses, the only stakeholders are owners. - correct answer ✔✔
Which of the following statements about the legal forms of for-profit business organization is most
correct?
a. Corporations are easier to form than are proprietorships.
b. Partnerships are applicable when there are more the three owners, while proprietorships are used
when there are three or less owners.
c. Corporations have the advantage of limited liability to owners.
d. Hybrid forms of business cannot be used by healthcare organizations.
e. With corporations, income is taxed only once and hence they typically are more tax efficient than
proprietorships or partnerships. - correct answer ✔✔
The primary goal of not-for-profit corporations generally is expressed in a mission statement that often
involves service to the community.
a. True
b. False - correct answer ✔✔
capital budgeting - correct answer ✔✔the analysis of potential additions to a business's fixed assets
Capital budgeting decisions: - correct answer ✔✔typically are LT in nature, often involve large
expenditures & usually define strategic direction
capital budgeting decisions are very -- to businesses - correct answer ✔✔important
proposed projects are classified according to -- and --(cost) - correct answer ✔✔purpose, size
for investor-owned businesses financial analysis identifies - correct answer ✔✔those projects that are
expected to contribute to shareholder wealth
for not-for-profit businesses, financial analysis indentifies - correct answer ✔✔a projects expected effect
on the business's financial condition
overview of capital budgeting financial analysis - correct answer ✔✔1. estimate the projects cash flows
2. assess the projects riskiness 3. estimate the project cost of capital 4. measure the financial impact
Identifying the relevant cash flows - correct answer ✔✔inc CF=CF(w/ project) - CF(w/o project)
Financial management provides the theories, concepts, and tools necessary to help managers make
better financial decisions.
a. True
b. False - correct answer ✔✔
Which of the following is not a finance activity?
a. Evaluation and planning
, b. Financing decisions
c. Long-term investment decisions
d. Financial risk management e. Facilities management - correct answer ✔✔
Because for-profit and not-for-profit organizations have different financial goals, the finance function is
totally different between these two forms of ownership.
a. True
b. False - correct answer ✔✔
Which of the following statements about organizational stakeholders is most correct?
a. All businesses have stakeholders.
b. Only for-profit businesses have stakeholders.
c. Only not-for-businesses have stakeholders.
d. Not-for-profit and for-profit businesses each have stakeholders, but they are completely different
parties.
e. In for-profit businesses, the only stakeholders are owners. - correct answer ✔✔
Which of the following statements about the legal forms of for-profit business organization is most
correct?
a. Corporations are easier to form than are proprietorships.
b. Partnerships are applicable when there are more the three owners, while proprietorships are used
when there are three or less owners.
c. Corporations have the advantage of limited liability to owners.
d. Hybrid forms of business cannot be used by healthcare organizations.
e. With corporations, income is taxed only once and hence they typically are more tax efficient than
proprietorships or partnerships. - correct answer ✔✔
The primary goal of not-for-profit corporations generally is expressed in a mission statement that often
involves service to the community.
a. True
b. False - correct answer ✔✔
