Instructor’s yManual yfor yFinancial y Management y for yPublic, yHealth, yand yNot-for-Profit
y Organizations1
,
SOLUTIONS MANUAL for Financial Management for Public
y y y y y y
Health, and Not-for-Profit Organizations 7th Edition by
y y y y y y y
Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
y y y y y y y
,Chapter y3: y Additional y Budgeting 3-2
y Concepts
INTRODUCTION
Chapter 1 y TO
FINANCIAL
MANAGEMENT
y
Questions yfor yDiscussion
1-1. yFinancial ymanagement yis ythe ysubset yof ymanagement ythat yfocuses yon ygenerating yfinancial
yinformation ythat ycan yimprove ydecisions. yThe ydecisions yare yoriented ytoward yachieving ythe
yvarious ygoals yof ythe yorganization ywhile ymaintaining ya ysatisfactory yfinancial ysituation. yFinancial
ymanagement yencompassesythe ybroad yareas yof yaccounting yand y finance.
1-2. yIn yproprietary, yor yfor-profit, yorganizations, yan yunderlying ygoal yis yto ymaximize ythe ywealth yof ythe
yowners yof ythe yorganization.
1-3. yIn ypublic yservice yorganizations, ydecisions yare yoriented ytoward yachieving ythe yvarious ygoals yof
ythe yorganization ywhile ymaintaining ya ysatisfactory yfinancial ysituation.
1-4. yAccounting yis ya ysystem yfor ykeeping ytrack yof ythe yfinancial ystatus yof yan yorganization yand ythe
yfinancial yresults yof yits yactivities. yIt yhas yoften ybeen yreferred yto yas ythe ylanguage yof ybusiness.
yThe yvocabulary yused yby yaccounting y is ythe y language yof ynonbusiness yorganizations yas ywell.
1-5. yAccounting yis ysubdivided yinto ytwo ymajor yareas: ymanagerial yaccounting yand yfinancial
yaccounting. yManagerial yaccounting yrelates yto ygenerating yany yfinancial yinformation ythat
ymanagers ycan yuse yto yimprove ythe yfuture yresults yof ythe yorganization. yThis yincludes ytechniques
ydesigned yto ygenerate yany yfinancial ydata ythat ymight yhelp ymanagers ymake ymore yeffective
ydecisions. yMajor yaspects yof ymanagerial yaccounting yrelate yto ymaking yfinancial yplans yfor ythe
yorganization, yimplementing ythose yplans, yand ythen yworking yto yensure ythat ythe yplans yare
yachieved. ySome yexamples yof ymanagerial yaccounting yinclude ypreparing yannual yoperating
ybudgets, ygenerating yinformation yfor yuse yin ymaking ymajor yinvestment ydecisions, yand yproviding
ythe ydata yneeded yto ydecide ywhether yto ybuy yor ylease ya ymajor ypiece yof yequipment. yFinancial
yaccounting yprovides yretrospective yinformation. yAs yevents ythat yhave yfinancial yimplications
yoccur ythey yare yrecorded yby ythe y financial yaccounting ysystem. yFrom ytime yto ytime y(usuallyymonthly,
yquarterly, yor yannually), ythe yrecorded ydata yare ysummarized yand yreported yto yinterested yusers.
yThe yusers yinclude yboth yinternal ymanagers yand ypeople youtside ythe yorganization. yThose
youtsiders yinclude ythose ywho yhave ylent yor ymight ylend ymoney yto ythe yorganization y(creditors),
ythose ywho ymight ysell ythings yto ythe yorganization y(called ysuppliers yor yvendors), yand yother
yinterested yparties. yThese yinterested yparties ymay yinclude ythose ywith ya yparticular yinterest yin
ypublic yservice yorganizations, ysuch yas yregulators, ylegislators, yand ycitizens. yFinancial yreports
yprovide yinformation yon ythe yfinancial ystatus yof ythe yorganization yat ya yspecific ypoint yin ytime, yas
ywell yas yreporting ythe ypast yresults yof ythe yorganization‘s yoperations y(i.e., yhow ywell yit y has ydone
yfrom ya y financial yviewpoint).
, Instructor’s yManual yfor yFinancial y Management y for yPublic, yHealth, yand yNot-for-Profit
y Organizations1
,
1-6. yFinance yfocuses yon ythe yalternative ysources yand yuses yof ythe yorganization‘s yfinancial yresources.
yObtaining yfunds ywhen yneeded yfrom yappropriate ysources yand ythe ydeployment yof yresources
ywithin ythe yorganization yfall yunder ythis yheading. yIn yaddition, yfinance yinvolves ythe yfinancial
ymarkets y(such yas ystock yand ybond y markets) ythat y provide ya y means yto y generating y funds yfor
yorganizations.
1-7. yYes. yAchieving ythe ygoals yof ythe yorganization yrequires yfinancial yplanning. yFinancial ymanagement
yprovides yinformation yfor ymanagers yto yuse yin ymaking ytheir ydecisions. yIt yhelps ymanagers yby
yproviding yinformation yon ythe ylikely yfinancial yimpact yof yeach yproposed yalternative. yIt yalso
yprovides yinformation yabout y financial ystability, y efficiency, yand yeffectiveness.
1-8. yClearly, ywe ymight yexpect ysome ypublic yservice yorganizations ythat yare yproprietary, ysuch yas ysome
yhospitals, yto yearn yprofits. yBut ywhat yabout yother ypublic yservice yorganizations ysuch yas ycharities?
yThey yshould ymake ya yprofit yas ywell. yProfits yprovide ya ysafety ymargin yagainst yunexpected ycosts,
yprovide yresources yto y replace ybuildings yand yequipment, y and yto y expand yand y improve yservices.
1-9. y Federal ygovernment y (see ytext y Figure y1-1)
◼ Individual yincome ytaxes
◼ Social yinsurance ytaxes
◼ Corporate yincome ytax
State yand ylocal ygovernment y (see ytext y Figure y1-4)
◼ Sales yand ygross yreceipts ytax
◼ Federalygovernment
◼ Property ytaxes
◼ Individual yincome ytaxes
Health ysector y(see ytext y Figure y1-6)
◼ Private yinsurance
◼ Medicare
◼ Medicaid
◼ Other ygovernment yprograms
Not-for-profit y sector y(see ytext)
◼ Private ypayments yfor ygoods yand yservices
◼ Government ypayments yfor ygoods yand yservices
◼ Donations
1-10. yFederal ygovernment yspending yexceeded y$6 ytrillion yin y2020 yand ystate yand ylocal ygovernment
y spending ywas ymore ythan y$3 ytrillion yin y2018. yIn ycontrast, ythe yGDP ywas y$21 ytrillion yin y2020. yFor
ymore yup yto ydate yinformation, yexamine ythe ystatistical ytables yof ythe ymost yrecent yEconomic
yReport yof ythe yPresident, y which yis yavailable yonline.
1-11. yThe yreported ysurplus yincludes yboth yon yand yoff ybudget yitems. ySocial ysecurity ytaxes yrepresent
yan yoff ybudget y item y that y until y recently y raised y more y revenue y than y was y spent y on y social
, Chapter y3: y Additional y Budgeting 3-4
y Concepts
y security y payments.
y Organizations1
,
SOLUTIONS MANUAL for Financial Management for Public
y y y y y y
Health, and Not-for-Profit Organizations 7th Edition by
y y y y y y y
Steven Finkler, Thad Calabrese, (Complete 15 Chapters)
y y y y y y y
,Chapter y3: y Additional y Budgeting 3-2
y Concepts
INTRODUCTION
Chapter 1 y TO
FINANCIAL
MANAGEMENT
y
Questions yfor yDiscussion
1-1. yFinancial ymanagement yis ythe ysubset yof ymanagement ythat yfocuses yon ygenerating yfinancial
yinformation ythat ycan yimprove ydecisions. yThe ydecisions yare yoriented ytoward yachieving ythe
yvarious ygoals yof ythe yorganization ywhile ymaintaining ya ysatisfactory yfinancial ysituation. yFinancial
ymanagement yencompassesythe ybroad yareas yof yaccounting yand y finance.
1-2. yIn yproprietary, yor yfor-profit, yorganizations, yan yunderlying ygoal yis yto ymaximize ythe ywealth yof ythe
yowners yof ythe yorganization.
1-3. yIn ypublic yservice yorganizations, ydecisions yare yoriented ytoward yachieving ythe yvarious ygoals yof
ythe yorganization ywhile ymaintaining ya ysatisfactory yfinancial ysituation.
1-4. yAccounting yis ya ysystem yfor ykeeping ytrack yof ythe yfinancial ystatus yof yan yorganization yand ythe
yfinancial yresults yof yits yactivities. yIt yhas yoften ybeen yreferred yto yas ythe ylanguage yof ybusiness.
yThe yvocabulary yused yby yaccounting y is ythe y language yof ynonbusiness yorganizations yas ywell.
1-5. yAccounting yis ysubdivided yinto ytwo ymajor yareas: ymanagerial yaccounting yand yfinancial
yaccounting. yManagerial yaccounting yrelates yto ygenerating yany yfinancial yinformation ythat
ymanagers ycan yuse yto yimprove ythe yfuture yresults yof ythe yorganization. yThis yincludes ytechniques
ydesigned yto ygenerate yany yfinancial ydata ythat ymight yhelp ymanagers ymake ymore yeffective
ydecisions. yMajor yaspects yof ymanagerial yaccounting yrelate yto ymaking yfinancial yplans yfor ythe
yorganization, yimplementing ythose yplans, yand ythen yworking yto yensure ythat ythe yplans yare
yachieved. ySome yexamples yof ymanagerial yaccounting yinclude ypreparing yannual yoperating
ybudgets, ygenerating yinformation yfor yuse yin ymaking ymajor yinvestment ydecisions, yand yproviding
ythe ydata yneeded yto ydecide ywhether yto ybuy yor ylease ya ymajor ypiece yof yequipment. yFinancial
yaccounting yprovides yretrospective yinformation. yAs yevents ythat yhave yfinancial yimplications
yoccur ythey yare yrecorded yby ythe y financial yaccounting ysystem. yFrom ytime yto ytime y(usuallyymonthly,
yquarterly, yor yannually), ythe yrecorded ydata yare ysummarized yand yreported yto yinterested yusers.
yThe yusers yinclude yboth yinternal ymanagers yand ypeople youtside ythe yorganization. yThose
youtsiders yinclude ythose ywho yhave ylent yor ymight ylend ymoney yto ythe yorganization y(creditors),
ythose ywho ymight ysell ythings yto ythe yorganization y(called ysuppliers yor yvendors), yand yother
yinterested yparties. yThese yinterested yparties ymay yinclude ythose ywith ya yparticular yinterest yin
ypublic yservice yorganizations, ysuch yas yregulators, ylegislators, yand ycitizens. yFinancial yreports
yprovide yinformation yon ythe yfinancial ystatus yof ythe yorganization yat ya yspecific ypoint yin ytime, yas
ywell yas yreporting ythe ypast yresults yof ythe yorganization‘s yoperations y(i.e., yhow ywell yit y has ydone
yfrom ya y financial yviewpoint).
, Instructor’s yManual yfor yFinancial y Management y for yPublic, yHealth, yand yNot-for-Profit
y Organizations1
,
1-6. yFinance yfocuses yon ythe yalternative ysources yand yuses yof ythe yorganization‘s yfinancial yresources.
yObtaining yfunds ywhen yneeded yfrom yappropriate ysources yand ythe ydeployment yof yresources
ywithin ythe yorganization yfall yunder ythis yheading. yIn yaddition, yfinance yinvolves ythe yfinancial
ymarkets y(such yas ystock yand ybond y markets) ythat y provide ya y means yto y generating y funds yfor
yorganizations.
1-7. yYes. yAchieving ythe ygoals yof ythe yorganization yrequires yfinancial yplanning. yFinancial ymanagement
yprovides yinformation yfor ymanagers yto yuse yin ymaking ytheir ydecisions. yIt yhelps ymanagers yby
yproviding yinformation yon ythe ylikely yfinancial yimpact yof yeach yproposed yalternative. yIt yalso
yprovides yinformation yabout y financial ystability, y efficiency, yand yeffectiveness.
1-8. yClearly, ywe ymight yexpect ysome ypublic yservice yorganizations ythat yare yproprietary, ysuch yas ysome
yhospitals, yto yearn yprofits. yBut ywhat yabout yother ypublic yservice yorganizations ysuch yas ycharities?
yThey yshould ymake ya yprofit yas ywell. yProfits yprovide ya ysafety ymargin yagainst yunexpected ycosts,
yprovide yresources yto y replace ybuildings yand yequipment, y and yto y expand yand y improve yservices.
1-9. y Federal ygovernment y (see ytext y Figure y1-1)
◼ Individual yincome ytaxes
◼ Social yinsurance ytaxes
◼ Corporate yincome ytax
State yand ylocal ygovernment y (see ytext y Figure y1-4)
◼ Sales yand ygross yreceipts ytax
◼ Federalygovernment
◼ Property ytaxes
◼ Individual yincome ytaxes
Health ysector y(see ytext y Figure y1-6)
◼ Private yinsurance
◼ Medicare
◼ Medicaid
◼ Other ygovernment yprograms
Not-for-profit y sector y(see ytext)
◼ Private ypayments yfor ygoods yand yservices
◼ Government ypayments yfor ygoods yand yservices
◼ Donations
1-10. yFederal ygovernment yspending yexceeded y$6 ytrillion yin y2020 yand ystate yand ylocal ygovernment
y spending ywas ymore ythan y$3 ytrillion yin y2018. yIn ycontrast, ythe yGDP ywas y$21 ytrillion yin y2020. yFor
ymore yup yto ydate yinformation, yexamine ythe ystatistical ytables yof ythe ymost yrecent yEconomic
yReport yof ythe yPresident, y which yis yavailable yonline.
1-11. yThe yreported ysurplus yincludes yboth yon yand yoff ybudget yitems. ySocial ysecurity ytaxes yrepresent
yan yoff ybudget y item y that y until y recently y raised y more y revenue y than y was y spent y on y social
, Chapter y3: y Additional y Budgeting 3-4
y Concepts
y security y payments.
