MHA 706 Financial Management Final
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1. Which of the following best describes the primary goal of financial
management in healthcare organizations?
A. Minimizing taxes
B. Maximizing market share
C. Maximizing the value of the organization
D. Reducing patient costs
Rationale: The primary goal of financial management is to increase
the overall value of the healthcare organization, which benefits
stakeholders and ensures sustainability.
,2. Which financial statement provides a snapshot of an organization's
financial position at a specific point in time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Budget Report
Rationale: The balance sheet summarizes assets, liabilities, and
equity at a particular moment, showing financial position.
3. The process of allocating capital to long-term assets is called:
A. Working capital management
B. Financial reporting
C. Capital budgeting
D. Cost accounting
Rationale: Capital budgeting is the process used to evaluate and
select long-term investments that align with organizational goals.
4. Which of the following is considered a current asset?
A. Land
B. Accounts receivable
C. Equipment
D. Patents
, Rationale: Accounts receivable is expected to be converted to cash
within one year, classifying it as a current asset.
5. The formula for calculating net present value (NPV) is:
A. Present value of inflows minus present value of outflows
B. Cash inflows divided by cash outflows
C. Present value of cash inflows minus initial investment
D. Future value minus discount rate
Rationale: NPV measures the difference between the present value
of cash inflows and the initial investment to assess project
profitability.
6. Which of the following best describes the time value of money?
A. Money has the same value at all times
B. A dollar today is worth more than a dollar in the future
C. Inflation decreases all monetary value equally
D. Only investments in stocks consider time value
Rationale: The time value of money reflects that money available
now can be invested to earn returns, making it more valuable than
the same amount in the future.
, 7. In financial ratio analysis, the current ratio measures:
A. Profitability
B. Efficiency
C. Liquidity
D. Solvency
Rationale: The current ratio (current assets ÷ current liabilities)
assesses an organization’s ability to meet short-term obligations.
8. A healthcare organization wants to reduce its accounts receivable
period. Which strategy would help achieve this?
A. Increasing service prices
B. Expanding services offered
C. Implementing stricter billing and collection policies
D. Hiring more clinical staff
Rationale: Shortening the accounts receivable period improves cash
flow, and stricter billing and collection policies are an effective
approach.
9. Which of the following is an example of a fixed cost in a hospital?
A. Medical supplies
B. Rent for the facility
C. Hourly nursing wages
D. Utility costs
Exam Lord Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following best describes the primary goal of financial
management in healthcare organizations?
A. Minimizing taxes
B. Maximizing market share
C. Maximizing the value of the organization
D. Reducing patient costs
Rationale: The primary goal of financial management is to increase
the overall value of the healthcare organization, which benefits
stakeholders and ensures sustainability.
,2. Which financial statement provides a snapshot of an organization's
financial position at a specific point in time?
A. Income Statement
B. Balance Sheet
C. Statement of Cash Flows
D. Budget Report
Rationale: The balance sheet summarizes assets, liabilities, and
equity at a particular moment, showing financial position.
3. The process of allocating capital to long-term assets is called:
A. Working capital management
B. Financial reporting
C. Capital budgeting
D. Cost accounting
Rationale: Capital budgeting is the process used to evaluate and
select long-term investments that align with organizational goals.
4. Which of the following is considered a current asset?
A. Land
B. Accounts receivable
C. Equipment
D. Patents
, Rationale: Accounts receivable is expected to be converted to cash
within one year, classifying it as a current asset.
5. The formula for calculating net present value (NPV) is:
A. Present value of inflows minus present value of outflows
B. Cash inflows divided by cash outflows
C. Present value of cash inflows minus initial investment
D. Future value minus discount rate
Rationale: NPV measures the difference between the present value
of cash inflows and the initial investment to assess project
profitability.
6. Which of the following best describes the time value of money?
A. Money has the same value at all times
B. A dollar today is worth more than a dollar in the future
C. Inflation decreases all monetary value equally
D. Only investments in stocks consider time value
Rationale: The time value of money reflects that money available
now can be invested to earn returns, making it more valuable than
the same amount in the future.
, 7. In financial ratio analysis, the current ratio measures:
A. Profitability
B. Efficiency
C. Liquidity
D. Solvency
Rationale: The current ratio (current assets ÷ current liabilities)
assesses an organization’s ability to meet short-term obligations.
8. A healthcare organization wants to reduce its accounts receivable
period. Which strategy would help achieve this?
A. Increasing service prices
B. Expanding services offered
C. Implementing stricter billing and collection policies
D. Hiring more clinical staff
Rationale: Shortening the accounts receivable period improves cash
flow, and stricter billing and collection policies are an effective
approach.
9. Which of the following is an example of a fixed cost in a hospital?
A. Medical supplies
B. Rent for the facility
C. Hourly nursing wages
D. Utility costs
