HSA 464 Test 3 Exam[] Review QUESTIONS A

HSA 464 Test 3 Exam[2025-2026] Review
QUESTIONS AND ALL CORRECT ANSWERS
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Working capital is defined as the - answer--sum of a healthcare
organization's investment in current assets.


Examples of current assets include - answer---inventories
-prepaid expenses


Liquidity refers to - answer--how quickly an asset can be converted into
cash


What are the advantages of having sufficient working capital on hand? -
answer---Organizations are able to pay their employees and vendors on
time, thereby maintaining a positive relationship
&
-Organizations have sufficient resources to repay loans and are
therefore creditworthy


Where does initial working capital for for-profit healthcare organizations
come from? - answer--philanthropy or tax-exempt bonds

, Permanent working capital is - answer--the minimum amount of
working capital always on hand


Sources of temporary working capital include - answer---trade credit
-equity
-debt


An organization using trade credits to finance temporary working capital
is essentially - answer--borrowing money from a loan company to
finance the purchase of the working capital


What does the term "5-15, net 30" mean? - answer--An organization
can receive a 5% discount if it pays within 15 days


What are cash flows? - answer--The difference between cash receipts
and cash disbursements


Why do healthcare organizations keep cash on hand? - answer--All of
the above
-For the expected demand to pay employees and vendors in cash
-For emergencies and unexpected purchases
-For the unexpected demand for cash when a vendor offers a price
reduction the organization does not want to pass up