Solution Manual for Financial Management for Public Health & Nonprofit Organizations by Finkler | Chapters 1–15 Complete

Solution Manual for
Financial Management for
Public Health & Nonprofit
Organizations by Finkler |
Chapters 1–15 Complete

, Instructor’s Manual for Financial Management for Public, Health, and Not-for-Profit Organizations1,
2E


INTRODUCTION
Chapter 1 TO
FINANCIAL
MANAGEMENT
QuestionsforDiscussion j j




1-1. j Financial management is the subset of management that focuses on generating
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




financial information that can improve decisions. The decisions are j j j j j j j j j j j j j j j j j j j j j j j j j j j




oriented toward achieving the various goals of the organization while j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




maintaining a satisfactory financial situation. Financial management encompasses the j j j j j j jjj jjj j j j jjj j j j j j j jj




broad areas of accounting and finance.
j jjj jjj jjj j jj jjj




1-2. j j j In j proprietary,
j or j for-profit, organizations, an underlying j j j j j j j j j j j j j j j j j j goal j j j is j j j




to j j j maximize the wealth of the owners of the organization. j j j j j j j j j j j j j j j jjj jjj jjj




1-3. j In j public service
j organizations, decisions are oriented
j toward j j j j j j j j j j j j j j j j j j j j j j j




achieving the various goals of the organization while maintaining a j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




satisfactory financial situation. jjj jjj




1-4. j Accounting is a system for keeping track of the financial status of an
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




organization and the financial results of its activities. It has often been j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




jreferred to as the language of business. The vocabulary used by j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j jjj




accounting is the language of nonbusiness organizations as well. j jj jjj jjj jjj jjj jjj jjj jjj




1-5. j Accounting is subdivided into two major areas: managerial accounting
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




and financial accounting. Managerial accounting
j j relates
j to generating j j j j j j j j j j j j j j j j j j




j any financial information
j j that managers can use to improve j j j j j j j j j j j j j j j j j j j j j j j j j j j




the future results of the organization. This includes techniques designed
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




to generate any financial data that might help managers make more effective
j j j j j j j j j jjj j j j j j j j j j j j j j j j j j j j j j j j j




decisions. Major aspects of managerial accounting relate to making financial plans j j j j j j j j j jjj j j j j j j j j j j j j j j j jj j j j j




for the organization, implementing those plans, and then
j j j working to ensure j j j j j j j j j j j j j j j j j j j j j j j j j j j j




j that the plans are achieved. Some examples of managerial accounting
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




j include
j preparing annual operating budgets, generating information j j j j j j j j j j j j j j j j j j j j




jfor use in making major investment decisions,
j and
j providing
j j j j j j j j j j j j j j j j j j j j j j j j j

,the data needed
j to
j decide
j whether to buy or lease aj j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




major piece of equipment. j Financial accounting provides retrospective
j j j j j j j j j j j j j j j j j j j j j j j




information. As events that have financial implications occur they are
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




recorded by the financial accounting system. From time to time (usually j j j monthly, jjj j j j jjj j j j j j j jjj j j j j j j j j j j j j j j j




quarterly, or annually), the recorded data are summarized and reported to interested
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




users. The users include j both j internalj managers and people j j j j j j j j j j j j j j j j j j j j j j j j




outside the organization. Those outsiders
j include those who have
j j j j j j j j j j j j j j j j j j j j j j j j j j




lent or might lend money to the organization (creditors), those who might
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




sell things j to the
j organization (called
j suppliers or vendors), and
j j j j j j j j j j j j j j j j j j j j j j j j j




j otherj interested parties. These interested parties may include those with a
j j j j j j j j j j j j j j j jjj jjj j j j j jj jjj jjj




particular interest in public service organizations, such as regulators, legislators, and
j j j j j j jjj jjj jjj j j j j jj j j j j j j j j j




j citizens. Financial reports provide information on the financial status of
j j j j j the j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




organization at a specific point in time, as well as reporting the past results of the j j j j j j j j j j j j j j j j j j j j j j j j jjj j j j j j j j j j j j j j j j jjj j j j




organization‘s operations (i.e., how well it has done from a financial viewpoint). j j j jjj j j j jjj jjj j j j jjj jjj jjj jjj jjj

, Chapter 3: Additional Budgeting Concepts 3-2



1-6. j Finance focuses on
j j the alternative sources and uses of the organization‘s j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




financial resources. Obtaining funds when needed from appropriate sources and j j j j j j j j j j j j j j j j j j j jj j j j j j j j




the deployment of resources within the
j j organization
j j j fall under this j j j j j j j j j j j j j j j j j j j j j j j j j j j




heading. In addition, finance involves the financial markets (such as j j j j j j j j j j j j j j j j j j j j j j j j j j j




j stock and bond markets) that provide a means to generating funds for
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




organizations.

1-7. j Yes.
j Achievingj the goals of the organization requires financial
j j j j j j j j j j j j j j j j j j j j j j j j j j




jplanning. Financial management provides information for managers to j j j j j j j j j j j j j j j j j j j j j j j j




use in making their decisions. It helps managers by j j j providing information
j j j j j j j j j j j j j j j j j j j j j j j j j j j j




jon the likely financial impact
j of each proposed alternative. It also
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




provides information about financial stability, efficiency, and effectiveness. j j j jjj j j j jjj j j j j j j jjj




1-8. j Clearly,
j we might j expect some public service organizations j j j j j j j j j j j j j j j j j j j j j j j j




that are proprietary, such as some hospitals, to earn profits. But
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




what about other public service organizations such as charities? They
j j jshould j j j j j j j j j j j j j j j jj j j j j jjj j j j j j j




make a profit as well. Profits provide a safety margin against
j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j




unexpected costs, provide resources to replace buildings and equipment, and j j j j j j j j j jjj j j j jjj jjj j jj j j j j jj




to expand and improve services. j j j jjj jjj jjj




1-9. jjj j j j Federal government (see text Figure 1-1) jjj j j j jjj j j j jjj




 Individual income taxes jjj jjj




 Social insurance taxes jjj jjj




 Corporate income tax jjj jjj




State and local government (see text Figure 1-4) jjj j jj jjj j j j jjj j j j jjj




 Sales and gross receipts tax jjj j jj jjj jjj




 Federal government jjj




 Property taxes jjj




 Individual income taxes jjj jjj




Health sector (see text Figure 1-6) j jj j j j jjj j j j jjj




 Private insurance jjj




 Medicare
 Medicaid
 Other government programs j j j j j j




Not-for-profit sector (see text) j j j j j j jjj




 Private payments for goods and services jjj jjj j j j jjj jjj




 Government payments for goods and services j j j jjj j j j jjj j jj




 Donations