Finance Test 5 Questions

• 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
Forecast difficulty is greatly affected by:
A. the amount of computerized check registers readily available.
B. the amount of electronic information readily available.
C. the type of gross salary payroll information readily available.
D. non-standardized worksheets.
• 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. $2,200
The figures on the present value table represent the value of:
A. $100.00.
B. $10.00.
C. $1.00.
D. $0.10.
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.
D. operating income (or loss) divided by total operating reven
ues. •
•
• Common sizing is sometimes called:
A. horizontal analysis.
B. vertical analysis.
C. trend analysis.
D. utilization changes.
Which of the following is NOT one of the issues regarding revenue
forecast assumptions?
A. Utilization
B. Patient Mix
C. Labor market issues
D. Contractual allowance
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. total net worth.
Liquidity ratios measure:
A. long-term sufficiency.
B. short-term sufficiency.
C. debt-load.
D. operating income.
The __________ chart's presentation style is circular.
A. bar
B. column
C. pie
D. line
The __________ chart's presentation style is circular.
A. bar
B. column
C. pie
D. line
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. net income.
Midtown Clinic's internet and telephone service expense for a tenmonth period amounts to $2,000. To annualize this expense for a
twelve-month period, the first step would be:
A. multiply the $2,000 by twelve.
B. multiply the $2,000 by ten.
C. divide the $2,000 by twelve.
D. divide the $2,000 by ten.
The __________ method calculates from period to period.
A. present-value analysis
B. internal rate of return
C. unadjusted rate of return
D. payback period
Trend analysis is sometimes called:
A. horizontal analysis.
B. vertical analysis.
C. utilization changes.
D. common sizing.
The __________ chart's data is presented in horizontal bars.
A. line
B. bar
C. pie
D. column
The name of Japanese currency is the:
A. Yen.
B. Yuan.
C. Euro.
D. Rand.
At Horizon Hospital there are separate nursing departmental
budgets for Inpatient Nursing and for Outpatient Nursing. Which
of the following expenses are likely to be identified in these two nursing departmental budgets?
A. Nursing salaries
B. Nursing administration
C. Quality management
D. Data processing
The Jones and Brown medical practice bought new equipment for
a total price of $50,000. The old equipment that was being
replaced was traded in on the new equipment. The seller allowed
$10,000 for the equipment that was traded in. What is the
resulting Jones and Brown cumulative cash flow?
A. $60,000
B. $50,000
C. $40,000
D. $10,000
The second step to annualize this expense for Midtown Clinic
would be to:
A. divide the answer from the first step by two.
B. divide the answer from the first step by ten.
C. multiply the answer from the first step by two.
D. multiply the answer from the first step by ten.
Which of the following is NOT one of the four basic chart styles?
A. Bar
B. Vertical
C. Pie
D. Line
If operating income is $500,000 and total operating revenues are
$10,000,000, the correct operating margin is:
A. 2%.
B. 5%.
C. 20%.
D. 50%.
Jim, the radiology department director, believes the annual
operating budgeting process is a tool used to increase his
department through the addition of staff and supplies. Susan, the
laboratory department director, believes the annual operating
budgeting process is a tool used to control costs. Dr. Smith, the
emergency department director, considers the budgeting process
a nuisance and believes he should simply increase all revenues
and expenses by five percent for the coming year to achieve a
budget. Whose viewpoint represents the proper objective for the
budgeting process?
A. Dr. Smith's view
B. Jim's view
C. Susan's view
D. All viewpoints are wrong
Assume the following: (1) Desired target operating income
$20,000; unit price for sales $500; variable costs per unit $300;
total fixed cost $10,000. (2) We have applied the formula to
calculate the contribution margin method of determining target
operating income, and have arrived at a numerator amount of
$30,000 (20,000 plus 10,000) and a denominator amount of $200
(500 minus 300). (3) These figures yield an answer of 150 units
(30,000 divided by 200). What is the required revenue to achieve
the target operating income of $20,000?
A. $30,000
B. $45,000
C. $75,000
D. $150,000
When calculating the payback period method for the acquisition
of equipment, the most critical assumption is:
A. useful life.
B. volume of usage.
C. interest rate.
D. average investment.
Variance analysis is primarily a matter of __________ analysis.
A. margin
B. differential
C. input-output
D. flexible.
The computation of a static budget requires:
A. three simple calculations.
B. two multi-level calculations.
C. one single calculation.
D. one multi-level calculation.
To calculate a contribution margin per unit, assume the following:
variable cost per unit $60; total fixed cost $2,000; unit price for
sales $100 and total sales $8,000. The contribution margin per
unit amounts to:
A. $20.
B. $40.
C. $60.
D. $80.
The type of capital expenditure proposal that may be the most
difficult to accomplish is a proposal to:
A. acquire capital assets for future use.
B. fund new programs.
C. acquire new equipment.D. fund expansion of existing programs.
Which of the following statements are correct?
A. Managers in cost center responsibility centers are responsible
for controlling both costs and revenues.
B. Managers in profit center responsibility centers are
responsible for controlling both costs and revenues.
C. Managers in profit center responsibility centers do not have to
report to a supervisor above them.
D. Managers in cost center responsibility centers do not have
to report to a supervisor above them.
Operating budgets typically:
A. contain expenses necessary to operate the facility.
B. reflect revenues from all sources.
C. have a futuristic view.
D. cover more than one year.
The following calculation should be performed to obtain a "Total
Variance" proof total:
A. budgeted cost less applied cost.
B. actual cost less applied cost.
C. actual cost less budgeted cost.
D. budgeted cost less budgeted cost.
Which variance is sometimes known as the efficiency variance?
A. Volume variance
B. Quantity variance
C. Price variance
D. Spending variance
Which of the cash flow reporting methods does not take
profitability into account?
A. Payback method
B. Accounting rate of return
C. Net present value
D. Internal rate of return
The Horizon Healthcare Foundation was formed to solicit donations that support certain initiatives of the Horizon Hospital.
The Foundation is a separate legal entity that meets all the
relevant IRS criteria for foundations. David, the hospital controller,
has prepared an operating budget for the coming year that
includes all revenues and expenses of the foundation within the
hospital's budget. Peggy, the hospital CFO, tells David to remove
the Foundation expenses and revenues. What is correct operating
budget procedure in this case?
A. Leave the foundation revenues and expenses in the hospital's
operating budget.
B. Remove the foundation revenues and expenses because it is a
separate legal entity.
C. Remove the foundation revenues and expenses because
Peggy doesn't get along with the foundation's director.
D. Peggy and David will work together to form a new agreedupon budget.