Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
31 Cards in this Set
- Front
- Back
|
Two main decisions of management
|
how to invest funds and how to raise funds
|
|
|
Corporations adv. and disadv.
|
Adv - limited liability, separate entity from mgmt, raise capital easily, under board of directors
Disadv - double taxation |
|
|
Partnerships adv. and disadv.
|
Two or more people
Adv: profits flow directly to partners, easy to form Disadv - dissolves when partner dies, hard to raise capital |
|
|
Primary objective of firm
|
shareholder wealth maximization
|
|
|
Value of cash flows
|
-amount of cash flow
-timing -rish: greater return for greater risk |
|
|
What is cash flow?
|
Sources and uses of cash from investing and financing acitivities
|
|
|
Unique about hospital cashflows
|
-changing demographics impact who pays
-payments received after care given -third party payors -cash flows depends on hospitals ability to process and collect -expenditures grow faster than cash generated |
|
|
Hospital's typical cash flows
|
-pat rev, copays, insurance reimbursement
-nonoperating - gift shops, cafeteria -donations, grants -endowment interest -investment interest |
|
|
Financial decisions made by hospital
|
-salary expense
-supplies -depreciation -debt expense -bad debt -decide where to spend money and how much to hold |
|
|
Primary purpose of US financial system
|
to transfer funds from those who have surplus to those who need funds
|
|
|
savings-investment cycle
|
actual savings for given period must equal actual investments
|
|
|
Flow of funds occur through financial middlemen
|
-Brokers - bring together buyers and sellers of securities
-Dealers - sell securities to investors out of an inventory they carry -Investment bankers - assist corporations in selling their securities |
|
|
Flow of funds occur through financial intermediaries
|
-banks
-investment companies -pension funds -insurance |
|
|
financial assets include
|
cash, debt, equity
|
|
|
Monkey market vs. capital market
|
MM - less than a year
ex: treasury bills CM - over 1 year ex: bonds |
|
|
Three types of market
|
-primary
-secondary -stock exchanges |
|
|
financial ratios tell us...
|
-comparison to self and other similar companes
-identify strengths and weaknesses -standardizes financial data |
|
|
Liquidity ratio
|
Indicates a firms ability to meet short term financial obligations
Ex: current ratio, days cash on hand |
|
|
Profitability ratio
|
Measures how effectively a firm’s management generates profits on sales, assets, and stockholder’s investments
ex: return on assets, return on equity |
|
|
Leverage
|
Indicate a firm’s capacity to meet short and long term debt obligations
Ex: debt to asset, debt to equity |
|
|
market-based
|
Measure the financial market’s evaluation of a company’s performance
|
|
|
Use of ratio by:
|
-mgmt
-creditors -board of directors -investors -ees |
|
|
Ratios tell us...
|
-how to invest and raise funds
-liquidity -asset mgmt -financial leverage -operational efficiency |
|
|
Time value of money is
|
conversion of cash flows at one time to their equivalent at another time
|
|
|
Environmental factors are
|
outside direct control of managers
|
|
|
Sole-proprieters make up
|
75% of all businesses in US
|
|
|
Common stock is
|
residiual form of ownership of corporation
|
|
|
Time value of money varies depending on
|
-purchasing power
-inflation -time -interest rates |
|
|
ordinary annuity
|
payments occur at end of period
|
|
|
annuity due
|
payments occur at beginning of period = more money!
|
|
|
issues you assess when reviewing credit of two hospitals besides ratios
|
-current economic condition
-demographics of pop being served -payor mix -mgmt/leadership reputation -strategic plan |
