Deck 7: Leveraging Financial Information to Improve Performance and Outcomes

Question 1

Which of the following statements is true regarding hospital margins from 2011 through 2015?

A) They increased for all hospitals.
B) They increased among hospitals in top quartile and decreased for those in the bottom quartile.
C) They decreased among hospitals in the top quartile and increased for those in the top quartile.
D) They decreased for all hospitals.

Answer 1

B

Question 2

Decisions that determine an organization's direction, including what customers to serve and where investments will be made with multi-year time horizons, are considered to be __________ decisions.

A) strategic
B) operational
C) control

Answer 2

A

Question 3

Decisions that determine how production occurs and output distribution are considered to be __________ decisions.

A) strategic
B) operational
C) control

Answer 3

B

Question 4

Decisions concerning staff, inventory, and quality assurance are considered to be __________ decisions.

A) strategic
B) operational
C) control

Question 5

Control decisions are made by

A) the board of directors.
B) senior managers.
C) middle level managers.
D) department managers.

Question 6

The financial acumen required by managers to deal with the challenges facing the healthcare industry includes the ability to:

A) construct efficient operating budgets, analyze actual operating results, and effectively respond to budget variances.
B) construct accurate capital budgets, perform post-expenditures reviews, and take effective action to ensure projects meet expectations.
C) report accurate financial results.
D) minimize the cost of capital by utilizing the optimal mix of debt and equity.

Question 7

The best budget system to support department managers in their role of facilitating and controlling production processes is:

A) incremental budgeting.
B) activity-based budgeting.
C) flexible budgeting.
D) zero-base budgeting.
E) program budgeting.

Question 8

Which category of ratios assesses management's overall effectiveness (i.e., the ability of managers to create wealth and value)?

A) Profitability
B) Liquidity
C) Capital structure
D) Turnover

Question 9

Capital structure ratios measure:

A) the ability of management to generate more revenues than expenses.
B) the productivity of assets.
C) the ability of the organization to meet its short-term financial obligations. D how assets are financed and the ability of the organization to meet all its financial obligations.

Question 10

DuPont analysis can reveal if an organization's low ROE is due to which of the following factors?

A) Poor pricing
B) Excessive expenses
C) Under-performing assets
D) Under-utilization of debt
E) All of these are correct.

Question 11

Operating indicators allow managers to identify the source of lower-than-desired financial performance by relating financial variables to operating variables such as:

A) occupancy.
B) average length of stay.
C) hours per discharge.
D) salary per FTE.
E) All of these are correct.

Question 12

Value is defined as:

A) Output ÷ cost.
B) Patient satisfaction ÷ cost.
C) Output ÷ price.
D) Patient satisfaction ÷ price.

Question 13

The three Lean wastes that focus on increasing or improving output rather than reducing cost are:

A) defects, idleness, and underutilized resources.
B) over-production, over-processing, and excessive motion.
C) excessive motion and transport and excessive inventory.
D) excess inventory, defects, and over-production.

Question 14

Strategic and control decisions differ by the type of managers responsible for the decision and the timeframe covered by the decision.

Question 15

Budgeting and operational planning are strategic decisions.

Question 16

Staff scheduling, inventory ordering, and quality assurance are control decisions.

Question 17

Activity-based budgeting encompasses the totality of production process, unlike other budgeting systems that focus primarily on one or two parts of a production system.

Question 18

The primary financial duties most managers will be responsible for are budget construction and variance analysis.

Question 19

The primary goal of incremental budgeting is to maximize efficiency (i.e., minimize the cost per output).

Question 20

The primary goal of incremental budgeting is ensure managers do not spend more than they are budgeted (i.e., controlling the use of inputs).

Question 21

The primary goal of flexible budgeting is to maximize efficiency (i.e., minimize the cost per output).

Question 22

Turnover ratios evaluate management's ability to convert sales into profit (or net income).

Question 23

Profitability ratios evaluate the ability to generate profit from assets.