Instructor’slManuallforlFinanciall Managementl forlPublic,lHealth,landlNot-for-ProfitlOrganizations1,
SOLUTIONS MANUAL for Financial Management for Public Hea
l l l l l l l
lth, and Not-for-
l l
Profit Organizations 7th Edition by Steven Finkler, Thad Calabr
l l l l l l l l
se, (Complete 15 Chapters)
l l l
,Chapterl3:l Additionall Budgetingl Concepts 3-2
INTRODUCTION
Chapter 1 l TO
FINANCIALM l
ANAGEMENT
QuestionslforlDiscussion
1-
1.lFinanciallmanagementlislthelsubsetloflmanagementlthatlfocuseslonlgeneratinglfinanciallinformati
onlthatlcanlimproveldecisions.lTheldecisionslarelorientedltowardlachievinglthelvariouslgoalsloflthelo
rganizationlwhilelmaintaininglalsatisfactorylfinanciallsituation.lFinanciallmanagementlencompasseslth
elbroadlareasloflaccountinglandlfinance.
1-2.lInlproprietary,lorlfor-
profit,lorganizations,lanlunderlyinglgoallisltolmaximizelthelwealthloflthelownersloflthelorganization.
1-
3.lInlpubliclservicelorganizations,ldecisionslarelorientedltowardlachievinglthelvariouslgoalsloflthelor
ganizationlwhilelmaintaininglalsatisfactorylfinanciallsituation.
1-
4.lAccountinglislalsystemlforlkeepingltrackloflthelfinanciallstatusloflanlorganizationlandlthelfinanciall
resultsloflitslactivities.lItlhasloftenlbeenlreferredltolaslthellanguageloflbusiness.lThelvocabularylusedl
bylaccountinglislthellanguageloflnonbusinesslorganizationslaslwell.
1-
5.lAccountinglislsubdividedlintoltwolmajorlareas:lmanageriallaccountinglandlfinanciallaccounting.l
Manageriallaccountinglrelatesltolgeneratinglanylfinanciallinformationlthatlmanagerslcanluseltolimpr
ovelthelfuturelresultsloflthelorganization.lThislincludesltechniquesldesignedltolgeneratelanylfinancia
lldatalthatlmightlhelplmanagerslmakelmoreleffectiveldecisions.lMajorlaspectsloflmanageriallaccounti
nglrelateltolmakinglfinanciallplanslforlthelorganization,limplementinglthoselplans,landlthenlworkinglt
olensurelthatlthelplanslarelachieved.lSomelexamplesloflmanageriallaccountinglincludelpreparinglan
nualloperatinglbudgets,lgeneratinglinformationlforluselinlmakinglmajorlinvestmentldecisions,landlp
rovidingltheldatalneededltoldecidelwhetherltolbuylorlleaselalmajorlpieceloflequipment.lFinanciallacc
ountinglprovideslretrospectivelinformation.lAsleventslthatlhavelfinanciallimplicationsloccurltheylarel
recordedlbylthelfinanciallaccountinglsystem.lFromltimeltoltimel(usuallylmonthly,lquarterly,lorlannuall
y),lthelrecordedldatalarelsummarizedlandlreportedltolinterestedlusers.lTheluserslincludelbothlintern
allmanagerslandlpeopleloutsidelthelorganization.lThoseloutsiderslincludelthoselwholhavellentlorlmi
ghtllendlmoneyltolthelorganizationl(creditors),lthoselwholmightlselllthingsltolthelorganizationl(calle
dlsupplierslorlvendors),landlotherlinterestedlparties.lTheselinterestedlpartieslmaylincludelthoselwithl
alparticularlinterestlinlpubliclservicelorganizations,lsuchlaslregulators,llegislators,landlcitizens.lFinanc
iallreportslprovidelinformationlonlthelfinanciallstatusloflthelorganizationlatlalspecificlpointlinltime,lasl
welllaslreportinglthelpastlresultsloflthelorganization‘sloperationsl(i.e.,lhowlwelllitl hasldonelfromlalfina
, Instructor’slManuallforlFinanciall Managementl forlPublic,lHealth,landlNot-for-ProfitlOrganizations1,
nciallviewpoint).
, Chapterl3:l Additionall Budgetingl Concepts 3-4
1-
6.lFinancelfocuseslonlthelalternativelsourceslandlusesloflthelorganization‘slfinanciallresources.lObta
ininglfundslwhenlneededlfromlappropriatelsourceslandltheldeploymentloflresourceslwithinlthelorga
nizationlfalllunderlthislheading.lInladdition,lfinancelinvolveslthelfinanciallmarketsl(suchlaslstocklandl
bondlmarkets)lthatl providelalmeansltol generatinglfundslforlorganizations.
1-
7.lYes.lAchievinglthelgoalsloflthelorganizationlrequireslfinanciallplanning.lFinanciallmanagementlpro
videslinformationlforlmanagersltoluselinlmakingltheirldecisions.lItlhelpslmanagerslbylprovidinglinfor
mationlonlthellikelylfinanciallimpactlofleachlproposedlalternative.lItlalsolprovideslinformationlabout
l financiallstability,lefficiency,landleffectiveness.
1-
8.lClearly,lwelmightlexpectlsomelpubliclservicelorganizationslthatlarelproprietary,lsuchlaslsomelhos
pitals,ltolearnlprofits.lButlwhatlaboutlotherlpubliclservicelorganizationslsuchlaslcharities?lTheylshoul
dlmakelalprofitlaslwell.lProfitslprovidelalsafetylmarginlagainstlunexpectedlcosts,lprovidelresourceslt
ol replacelbuildingslandlequipment,landltolexpandlandlimprovelservices.
1-9.l Federallgovernmentl(seeltextlFigurel1-1)
◼ Individuallincomeltaxes
◼ Sociallinsuranceltaxes
◼ Corporatelincomeltax
Statelandllocallgovernmentl(seeltextlFigurel1-4)
◼ Saleslandlgrosslreceiptsltax
◼ Federallgovernment
◼ Propertyltaxes
◼ Individuallincomeltaxes
Healthlsectorl(seeltextlFigurel1-6)
◼ Privatelinsurance
◼ Medicare
◼ Medicaid
◼ Otherlgovernmentlprograms
Not-for-profitl sectorl(seeltext)
◼ Privatelpaymentslforlgoodslandlservices
◼ Governmentlpaymentslforlgoodslandlservices
◼ Donations
1-
10.lFederallgovernmentlspendinglexceededl$6ltrillionlinl2020landlstatelandllocallgovernmentl spendi
nglwaslmorelthanl$3ltrillionlinl2018.lInlcontrast,lthelGDPlwasl$21ltrillionlinl2020.lForlmorelupltoldatel
information,lexaminelthelstatisticalltablesloflthelmostlrecentlEconomiclReportloflthelPresident,lwhi
chlislavailablelonline.
SOLUTIONS MANUAL for Financial Management for Public Hea
l l l l l l l
lth, and Not-for-
l l
Profit Organizations 7th Edition by Steven Finkler, Thad Calabr
l l l l l l l l
se, (Complete 15 Chapters)
l l l
,Chapterl3:l Additionall Budgetingl Concepts 3-2
INTRODUCTION
Chapter 1 l TO
FINANCIALM l
ANAGEMENT
QuestionslforlDiscussion
1-
1.lFinanciallmanagementlislthelsubsetloflmanagementlthatlfocuseslonlgeneratinglfinanciallinformati
onlthatlcanlimproveldecisions.lTheldecisionslarelorientedltowardlachievinglthelvariouslgoalsloflthelo
rganizationlwhilelmaintaininglalsatisfactorylfinanciallsituation.lFinanciallmanagementlencompasseslth
elbroadlareasloflaccountinglandlfinance.
1-2.lInlproprietary,lorlfor-
profit,lorganizations,lanlunderlyinglgoallisltolmaximizelthelwealthloflthelownersloflthelorganization.
1-
3.lInlpubliclservicelorganizations,ldecisionslarelorientedltowardlachievinglthelvariouslgoalsloflthelor
ganizationlwhilelmaintaininglalsatisfactorylfinanciallsituation.
1-
4.lAccountinglislalsystemlforlkeepingltrackloflthelfinanciallstatusloflanlorganizationlandlthelfinanciall
resultsloflitslactivities.lItlhasloftenlbeenlreferredltolaslthellanguageloflbusiness.lThelvocabularylusedl
bylaccountinglislthellanguageloflnonbusinesslorganizationslaslwell.
1-
5.lAccountinglislsubdividedlintoltwolmajorlareas:lmanageriallaccountinglandlfinanciallaccounting.l
Manageriallaccountinglrelatesltolgeneratinglanylfinanciallinformationlthatlmanagerslcanluseltolimpr
ovelthelfuturelresultsloflthelorganization.lThislincludesltechniquesldesignedltolgeneratelanylfinancia
lldatalthatlmightlhelplmanagerslmakelmoreleffectiveldecisions.lMajorlaspectsloflmanageriallaccounti
nglrelateltolmakinglfinanciallplanslforlthelorganization,limplementinglthoselplans,landlthenlworkinglt
olensurelthatlthelplanslarelachieved.lSomelexamplesloflmanageriallaccountinglincludelpreparinglan
nualloperatinglbudgets,lgeneratinglinformationlforluselinlmakinglmajorlinvestmentldecisions,landlp
rovidingltheldatalneededltoldecidelwhetherltolbuylorlleaselalmajorlpieceloflequipment.lFinanciallacc
ountinglprovideslretrospectivelinformation.lAsleventslthatlhavelfinanciallimplicationsloccurltheylarel
recordedlbylthelfinanciallaccountinglsystem.lFromltimeltoltimel(usuallylmonthly,lquarterly,lorlannuall
y),lthelrecordedldatalarelsummarizedlandlreportedltolinterestedlusers.lTheluserslincludelbothlintern
allmanagerslandlpeopleloutsidelthelorganization.lThoseloutsiderslincludelthoselwholhavellentlorlmi
ghtllendlmoneyltolthelorganizationl(creditors),lthoselwholmightlselllthingsltolthelorganizationl(calle
dlsupplierslorlvendors),landlotherlinterestedlparties.lTheselinterestedlpartieslmaylincludelthoselwithl
alparticularlinterestlinlpubliclservicelorganizations,lsuchlaslregulators,llegislators,landlcitizens.lFinanc
iallreportslprovidelinformationlonlthelfinanciallstatusloflthelorganizationlatlalspecificlpointlinltime,lasl
welllaslreportinglthelpastlresultsloflthelorganization‘sloperationsl(i.e.,lhowlwelllitl hasldonelfromlalfina
, Instructor’slManuallforlFinanciall Managementl forlPublic,lHealth,landlNot-for-ProfitlOrganizations1,
nciallviewpoint).
, Chapterl3:l Additionall Budgetingl Concepts 3-4
1-
6.lFinancelfocuseslonlthelalternativelsourceslandlusesloflthelorganization‘slfinanciallresources.lObta
ininglfundslwhenlneededlfromlappropriatelsourceslandltheldeploymentloflresourceslwithinlthelorga
nizationlfalllunderlthislheading.lInladdition,lfinancelinvolveslthelfinanciallmarketsl(suchlaslstocklandl
bondlmarkets)lthatl providelalmeansltol generatinglfundslforlorganizations.
1-
7.lYes.lAchievinglthelgoalsloflthelorganizationlrequireslfinanciallplanning.lFinanciallmanagementlpro
videslinformationlforlmanagersltoluselinlmakingltheirldecisions.lItlhelpslmanagerslbylprovidinglinfor
mationlonlthellikelylfinanciallimpactlofleachlproposedlalternative.lItlalsolprovideslinformationlabout
l financiallstability,lefficiency,landleffectiveness.
1-
8.lClearly,lwelmightlexpectlsomelpubliclservicelorganizationslthatlarelproprietary,lsuchlaslsomelhos
pitals,ltolearnlprofits.lButlwhatlaboutlotherlpubliclservicelorganizationslsuchlaslcharities?lTheylshoul
dlmakelalprofitlaslwell.lProfitslprovidelalsafetylmarginlagainstlunexpectedlcosts,lprovidelresourceslt
ol replacelbuildingslandlequipment,landltolexpandlandlimprovelservices.
1-9.l Federallgovernmentl(seeltextlFigurel1-1)
◼ Individuallincomeltaxes
◼ Sociallinsuranceltaxes
◼ Corporatelincomeltax
Statelandllocallgovernmentl(seeltextlFigurel1-4)
◼ Saleslandlgrosslreceiptsltax
◼ Federallgovernment
◼ Propertyltaxes
◼ Individuallincomeltaxes
Healthlsectorl(seeltextlFigurel1-6)
◼ Privatelinsurance
◼ Medicare
◼ Medicaid
◼ Otherlgovernmentlprograms
Not-for-profitl sectorl(seeltext)
◼ Privatelpaymentslforlgoodslandlservices
◼ Governmentlpaymentslforlgoodslandlservices
◼ Donations
1-
10.lFederallgovernmentlspendinglexceededl$6ltrillionlinl2020landlstatelandllocallgovernmentl spendi
nglwaslmorelthanl$3ltrillionlinl2018.lInlcontrast,lthelGDPlwasl$21ltrillionlinl2020.lForlmorelupltoldatel
information,lexaminelthelstatisticalltablesloflthelmostlrecentlEconomiclReportloflthelPresident,lwhi
chlislavailablelonline.
