Q&A Hero

Q: average annual net income divided by original investment amount equals: a. present value b. rate of return c. budget variance

Q: evaluating the use of money is possible through computation of: a. internal rate of return b. present value analysis c. unadjusted rate of return d. payback period e. all of the above f. none of the above

Q: profitability ratios reflect the ability of the organization to operate with an __________ of operating revenue over operating expense.

Q: liquidity ratios reflect the ability of the organization to meet its' __________ obligations. ans: current (optional

Q: ratio analysis should be conducted as a __________ analysis.

Q: the standard by which the quick ratio is measured is generally two to one.

Q: the debt service coverage ratio (dscr) is computed as total liabilities divided by unrestricted net assets.

Q: to calculate a ratio, divide the bottom number (denominator) into the top number (numerator).

Q: days receivables and days cash on hand (dcoh) are both solvency types of ratios.

Q: while the current ratio is a measure of short-term debt-paying ability, the quick ratio is an even more severe test of such ability.

Q: to calculate a quick ratio, the denominator consists of current liabilities. the numerator is a combination of the following: a. cash and cash equivalents b. gross receivables c. net receivables d. a & b e. a & c f. none of the above

Q: do solvency and profitability ratios actually measure the same things, but in different ways? a. always b. sometimes c. never d. dont know

Q: if current assets amount to $120,000, total assets are $600,000, current liabilities are $60,000, long term debt is $340,000 and total liabilities are $400,000, what is the current ratio? a. 1.5 to 1 b. 1.76 to 1 c. 2 to 1 d. none of the above

Q: if assets are $1,000,000, liabilities are $600,000 and net worth is $400,000, what is the liabilities to fund balance/net worth ratio? a. 0.667 b. 1.4 c. 1.5 d. 1.6 e. none of the above

Q: an important part of the finance world is the use of proper terms. in that context, when debt (loans, mortgages, etc.) is involved, what is the proper spelling of the following term, or word? a. principal b. principle c. neither of the above

Q: sample hospitals benchmark data report also includes the days receivable ratio (listed on the report as net days in patient ar). the days receivable for year 1 amounted to 50.73 days, while the days receivable for the first quarter of year 2 amounted to 49.0 days. is the result for the first quarter of year 2 better or worse than the result reported for year 1? a. better b. worse c. the same (neutral) d. dont know

Q: sample hospitals benchmark data report appears in the metropolis health systems appendix whose title begins comparative analysis using financial ratios and benchmarking. the benchmark data report contains various ratios, one of which is the return on total assets. accordingly, sample hospitals return on total assets for year 1 amounted to minus 2.37%, while the first quarter of its year 2 amounted to minus 3.58%. is the result for the first quarter of year 2 better or worse than the result reported for year 1? a. better b. worse c. the same (neutral) d. dont know

Q: the current ratio is typically measured against a standard of: a. 1 to 1 b. 2 to 1 c. 1 to 2 d. none of the above

Q: the days receivable computation: a. represents the number of days in receivables b. is a common measure of billing performance c. is a common measure of collection performance d. is a measure of worth as well as performance e. all of the above f. none of the above

Q: the days cash on hand ratio indicates cash on hand in relation to the amount of: a. daily operating expense b. monthly operating expense c. yearly operating expense d. none of the above

Q: ratio analysis should: a. be interpreted within the context of the operation b. have the differences between periods considered c. typically be conducted as a comparative analysis d. rarely be conducted as a comparative analysis e. a & b f. a, b & c g. a, b & d h. none of the above

Q: the liabilities to fund balance computation is typically presented as a: a. percentage b. ratio c. either of the above d. neither of the above

Q: the liabilities to fund balance computation may be represented as: a. total debt divided by tangible net worth b. total liabilities divided by unrestricted net assets c. either of the above d. neither of the above

Q: lending agreements often have a provision that requires the debt service coverage ratio (dscr) to be maintained: a. at or above a certain figure b. below a certain figure c. either of the above d. neither of the above

Q: in regard to the dscr formula, change in unrestricted net assets is also typically known as: a. net debt service b. total income c. net assets d. none of the above

Q: the formula for a debt service coverage ratio (dscr) is represented as change in unrestricted net assets plus interest, depreciation and amortization divided by: a. maximum total debt service b. maximum annual debt service c. total long-term liabilities d. none of the above

Q: an alternative computation for return on total assets is: a. net income divided by total assets b. net income divided by total net worth c. either of the above d. neither of the above

Q: the acronym ebit a. is a broad measure in common use b. is widely used in by credit analysts c. is computed as earnings after interest and taxes (ebit) divided by total assets d. a & b e. b & c f. all of the above

Q: if total operating revenues are $20,000 and the operating margin is 10%, what is the amount of operating income? a. $200 b. $1,000 c. $2,000 d. none of the above

Q: the operating margin: a. sometimes enters into credit analysis b. is a multipurpose measure c. is used for a number of managerial purposes d. all of the above e. none of the above

Q: if operating income is $500,000 and total operating revenues are $10,000,000, the correct operating margin is: a. 5% b. 20% c. 2% d. 50%

Q: the operating margin is computed as follows: a. total operating revenues divided by operating income (or loss) b. operating income (or loss) divided by total operating revenues c. either of the above d. neither of the above

Q: the indicator that is more severe than the liabilities to fund balance ratio is described as: a. total assets to fund balance b. net worth (fund balance) to long-term debt c. long-term debt to net worth (fund balance) d. none of the above

Q: solvency ratios reflect the ability of the organization to pay its annual debt obligations, including: a. annual interest and principal obligations on its long-term debt b. annual interest and principal obligations on both its long-term and short-term debt c. annual principal obligations only on its long-term debt d. none of the above

Q: liquidity ratios measure: a. long-term sufficiency b. short-term sufficiency c. both of the above d. neither of the above

Q: the ratios adopted in healthcare financial management are typically: a. uniform measures b. convenient measures c. both of the above d. neither of the above

Q: solvency ratios: a. reflect the ability of the organization to pay annual obligations on its long term debt b. measure the organization's ability to have sufficient resources to meet its long term obligations c. both a and b d. neither a nor b

Q: the liabilities to fund balance ratio is: a. a quick indicator of debt load b. also known as the debt to net worth ratio c. both a and b d. neither a nor b

Q: return on total assets may be computed as: a. earnings before interest and taxes (ebit) divided by total assets b. earnings after interest and taxes (ebit) divided by total assets c. earnings before interest and taxes (ebit) divided by total net worth

Q: profitability ratios include: a. operating margin b. return on total assets c. both a and b d. neither a nor b

Q: subsidiary reports are __________ to the four major reports.

Q: the statement of cash flows typically takes the __________ basis statements and converts them to a cash flow for the period through a series of reconciling adjustments that account for the noncash amounts.

Q: the excess of revenue over expenses flows back into equity or fund balance through the statement of fund balance/net worth.

Q: the basic formula for a statement of revenue and expense is as follows: operating revenue minus operating expense equals operating income.

Q: the statement of revenue is stated at a particular point in time.

Q: the balancing of the elements in the balance sheet represents: "beginning balance plus operating income equals ending balance".

Q: in cash basis accounting, revenue is recorded when it is earned and expenses are recorded when they are incurred.

Q: the four major reports are the balance sheet; the statement of revenue and expense; the statement of changes in fund balance/net worth; and the cash flow statement.

Q: proceeds from loan on equipment belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: net increase (decrease) in cash and cash equivalents belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: unrestricted fund balance belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: nonoperating gains (losses) belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: medical supplies and drugs-inventory belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: medical supplies and drugs expense belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: patient accounts receivable belongs on the: a. balance sheet b. statement of revenue and expenses c. neither of the above

Q: subsidiary reports: a. support the major reports by providing more detail b. are typically called statements instead of schedules c. both of above d. neither of the above

Q: the statement of cash flows uses a series of reconciling adjustments to account for: a. cash amounts b. noncash amounts c. either of the above d. neither of the above

Q: when the result of operations is in a comparative format that presents more than one period of time (such as for the year ended december 31, 2013 and for the year ended december 31, 2014), the most current period should appear on the statement in the: a. left column b. right column c. not applicable

Q: the use of proper terms is an important part of the finance world. in that context, when gaap is involved, what is the proper spelling of the following term, or word? a. principal b. principle c. neither of the above

Q: certain barriers exist as to the adoption of international accounting standards for financial reporting by certain u.s. companies. these barriers include: a. funding of the effort b. maintenance of the standards c. global comparability d. governance issues e. a & b f. a & c g. a, b & c h. a, b & d

Q: if international accounting standards were to be imposed on financial reporting for certain u.s. companies, the benefits could include: a. global comparability b. accounting standard consistency c. funding of the adoption process d. a & b e. a & c f. b & c g. all of the above

Q: standards underlying generally accepted accounting principles within the u.s. are presently produced by a board known as: a. sec b. iasb c. fasb d. none of the above

Q: generally accepted accounting principles (gaap) require that unrestricted fund balances be separated from restricted fund balances on the financial statements. a. correct b. not correct c. not applicable

Q: the recognition of depreciation is one of the characteristics of accrual accounting. a. correct b. not correct c. not applicable

Q: what balance sheet item is never depreciated? a. equipment b. buildings c. land d. none of the above

Q: depreciation expense: a. represents a cash expense b. does not represent a cash expense c. not applicable

Q: the statement of changes in fund balance/net worth has been described as the mechanism that links the balance sheet and the statement of revenue and expenses. a. correct b. not correct c. not applicable

Q: conceptually speaking, if the year has been good, then revenue less expenses should result in an excess of expenses over revenue. a. correct b. not correct c. not applicable

Q: revenue is considered to be outflow, and expenses are considered to be inflow. a. correct b. not correct c. not applicable

Q: which of these financial statements is compared to a snapshot in the text? a. balance sheet b. statement of revenue and expense c. neither of the above

Q: which of the financial statements is compared to a diary in the text? a. balance sheet b. statement of revenue and expense c. statement of fund balance/net worth

Q: which of the following is correct? the statement of changes in fund balance/net worth is: a. stated over a period of time b. freezes figures and reports them as of a certain date c. neither of the above

Q: which of the following is correct? the statement of revenue and expense is: a. stated at a particular point in time b. stated over a period of time c. neither of the above

Q: which of the four major reports is stated at a particular point in time? a. balance sheet b. statement of revenue and expense c. statement of changes in fund balance/net worth d. statement of cash flows

Q: reports prepared in accordance with generally accepted accounting principles: a. are intended for third party use b. are not necessary for managerial accounting for internal purposes c. both a and b d. neither a nor b

Q: the statement of revenue reflects a record of: a. what an organization owns, what it owes, and what it is worth b. a record of transactions over a period of time c. both of the above d. neither of the above

Q: subsidiary schedules include: a. balance sheet and schedule of patient revenue b. schedule of operating expenses and schedule of hospital statistics c. neither of the above

Q: the balance sheet reflects a record of: a. what an organization owns, what it owes and what it is worth b. a record of transactions over a period of time c. neither of the above

Q: for purposes of annualizing positions, the definition of full time equivalent (fte) is as follows: the equivalent of one full-time employee __________ one year, including both productive and nonproductive time.

Q: nonproductive time means additional days __________ but not worked.