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59 Cards in this Set
- Front
- Back
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What is the difference between Accounting and Financial Management?
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Accounting is the recording of economic events in an organization, whereas Financial management is the theory and practice of for make/buy decions
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Whats impact has advancement in technology and the shift of workload form inpatient to outpatient had on hospitals.
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It has led to increased stabilization of patients, more 'out of house' patients (more out patients), more diagnostic imaging and referrals.
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The forms for regulation NOT used in health services industry...
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JCAHO, NCQA, Professional Liability
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Contributions fir a For Profit Organization are tax deductible for the contributor? T or F
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False
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What does the Securities and Exchange Commission do?
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They regulate the business practices of all taxable enterprises to make sure that they are following legal business functions in accounting and financial statements.
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Basic concepts that are NOT applied to Financial Statements are...
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Summarized, Legible, Easy to Understand,
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Major components of the Income statement are...
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Revenues, Expenses, and Net Income/Profit
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What happens to net income in a for profit organization?
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It goes to all Shareholders because the role of a for profit business is to maximize shareholder's wealth
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What about for a non for profit?
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The net income goes right back into the organization so it can be financially viable. Not for profits are more concerned about achieving their mission statement.
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What are Current Assets/Liabilities?
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They are anything that has value or is an obligation for an organization that can be turned over or paid within a short term like a year.
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What are Longterm Assets/ Liabilities ?
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They expand for a long period of time (many years).
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The GAAP must be followed by all businesses? T or F
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False, only publicly trading businesses.
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In healthcare, all stakeholders are stockholders? T or F, Why?
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False, not for profit and for profit organizations have stakeholders but only a for profit organizations have stockholders (who claim shares) that are also stakeholders.
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The bottom line of the Income Statement is net income. It tells you if the business is _____________
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Profitable
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If you are profitable you will never have to file for bankruptcy? T or F?
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False. Just because the accounts receivable maybe large, it does not mean that organization has received payment yet. Must know if their is cash on hand to also pay off debt/liabilities.
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What is the profit at break even?
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$0
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Direct costs are overhead costs? T or F?
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False!
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What is the difference between full costs and marginal cost pricing?
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Full costs recover all costs and doesn't fluctuate with volume, whereas marginal cost pricing are variable costs.
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What is NOT a budget type?
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Long term Budget
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What are the three major uses for a budget?
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Planning, Communicating, and Control
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Determining the Present Value of an annuity or an uneven cash flow is called...
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Discounting
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The "Power of Compounding" refers to...
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High or frequent compounding interest
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The opportunity Cost remains the same regardless of risk? T or F?
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False, has to be of similar risk
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An annuity due and an ordinary annuity are forms of an uneven cash flow? T or F?
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False
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What does NOT affect the supply and the demand of investment capital?
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Interest Rate
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Name 3 Long Term Debt Instruments
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Term Loan, Bond, Mortgage Bond... dependature
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An unsecured loan will higher interest rate because...
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it is a higher risk and does not have real property as collateral
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Capital budgeting is important because...
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of long term interest, strategic value, and because the business is investing a lot of money. It is the analysis of potential additions to a business's fixed assets.
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Project Classification has 4 categories. T or F? Name 3
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False, there are 6. Mandatory Replacements, Environmental Projects, and Other.
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When doing Financial Analysis on a Capital Project, two factors that have to be taken into consideration are Operating and Terminal Cash Flow. Name another factor.
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Incremental Cash Flows
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Financial Analysis of a Capital Project is the Sole determining factor for a Not for Profit healthcare organization. T or F?
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False, it is important but the mission statement mus also be considered.
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What are the types of Financial Statement Analysis?
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Ratio Analysis and Operating Analysis
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One of the most important characteristics of a business is ...
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Financial Performance. Its' analysis assess the financial condition and its financial capacity to meet its mission statement. Strengths and Weaknesses
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Operating Analysis focuses on...
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Operating Data with the goal of explaining financial performance. MVA & EVA managerial performance
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Ratio Analysis
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Takes all info and render it into one number in order to easily interpret its economic significance and to facilitate comparisons.
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What are the Ratio Analysis categories?
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Liquidity (cash to meet obligations?), Profitability (generating enough profits?), Debt Management (right mix of debt and equity?), Asset Management (Right amount of assets for its volume?)
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What are the broad categories under Operating Indicators?
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Intensity of Service Indicators, Volume Indicators, Length of Stay Indicators, Efficiency Indicators, Unit Cost Indicators, Net Price Indicators, Profit Indicators
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What are the two techniques to Interpret Ratios?
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Trend (time series) Analysis, and Comparative (cross sectional) Analysis
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What are the limitations of Financial Performance Analysis?
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Comparison of Industry averages is difficult due to operational divisons, average doesn't mean good, seasonal factors, and inflation distorts data, different operating and accounting practices, hard to tell if ratio is good or bad/strong or weak,
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What is the Accounting Identity?
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it is Assets - Liabilities = Equity
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What is the Accounting Entity
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The name of the Organization
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HPM students have 'Healthcare Finance' as a different course, not just a regular FIN or ACC class, because...
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The Healthcare Industry has a different buyer/seller relationship than in the general market. For example, the 3rd party payer system.
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What are the three main forms of business ownership, and what do they mean?
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Proprietorship (owned by one person), Partnership (Owned by two or more people), and Corporations (Separate and distinct from its managers). Corps have less liability
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How do taxes effect your financial decision?
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well... for example: a tax free bond will have a lower interest rate, and a taxable bond may have a high interest rate.
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Who is more at risk in capitation and fee-for-service?
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in Capitation, the provider is more at risk. In Fee-For-Service the payer is more at risk
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What is the role of 'Cash Flow'?
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Cash Flow allows us to pay our bills. If we did not have enough cash flows or accounts receivable we would need to take out a short term loan.
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What is the Statement of Cash Flows?
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It looks at the changes in position of the organization
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Managerial Accounting uses:
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Operational data and is the number used for the people doing the job
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The Contribution Margin...
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flows to the fixed cost before break even
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What is the goal of cost allocation?
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It is to equally distribute indirect costs to sub-units (typically the patients service departments)
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Indirect costs are...
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OVERHEAD Costs
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What method is cost allocation commonly used in?
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The Step Down method
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ABC stands for ?
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Activity Based Costing
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What is the Operating Budget?
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it is a detailed budget of the last plan
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Tell me a bit about the Time Value Analysis...
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Well, the bank always wins. 1st payments are interest payments to the bank. The ending payments are towards your principal
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What is finding the future value of a lump sum called? (aka moving to the right of the time line?)
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Compounding
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What is the Cost Pool?
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it is the overhead amount to be allocated
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A Cost Driver is?
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the basis on which the cost pool was allocated (usually space used).
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What is the Allocation Rate?
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Cost Pool divided by Cost Driver
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