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Exam 17: Revenue Cycle and Financial Management

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Question 1

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The CFO asks you to compare the value of purchasing new high-speed photocopying equipment with contracted copying services. What capital expenditure evaluation method would you use?

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Question 2

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The condition of the ____________________ budget will be examined to determine whether sufficient cash will be available to meet the upcoming expenses for implementing the new service and also the one-time expense associated with the acquisition of the equipment and software.

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Question 3

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On what report would the manager locate the gross revenue for health information imaging services to use as the numerator when calculating the accounts receivable turnover for the new imaging service?

Use the following to answer the following questions. In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities. A commitment was made to an optical imaging system and service to be implemented at the first of the year. The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department. It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years) , and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually. The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month. The accounting department uses straight line depreciation, that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used. -In the process of calculating the net cash outflow, equipment depreciation was considered an outflow. Do you agree?

Saint Elsewhere Community Hospital is considering investing $90,000 in new transcription equipment to replace its current equipment, which is completely depreciated and outmoded. An alternative to this investment is a long-term contract with a local transcription firm to perform the transcription service. It is expected that the hospital would save $20,000 per year in operating costs if the transcription was performed internally. The expected and depreciable life of the equipment is 6 years. Calculate the net present value of the investment.

Explain the benefits of performing ratio analysis.

Use the following to answer the following questions. -Referring to the information given, compute the return on assets.

Balance sheet numbers are used in computing liquidity and capitalization ratios.

Use the following to answer the following questions. -Referring to the information given, how much depreciation expense would the hospital incur each year for the optical imaging components?

Use the following to answer the following questions. In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities. A commitment was made to an optical imaging system and service to be implemented at the first of the year. The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department. It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years) , and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually. The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month. The accounting department uses straight line depreciation, that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used. -The monthly fee for leasing the van in the health information imaging service is considered a fixed cost.

To calculate the _________________________ for the committee's review, the net cash inflow and outflow was calculated for the proposed imaging system.

Which financial statement depicts the financial activity of an organization for a period of time?

Can an organization be effective but not efficient? Discuss the circumstances in which this could be true.

In addition, the health information manager wants to carefully monitor the accounts receivables for the newly implemented system to track the (number of days) of revenue in accounts receivable. What financial statement would supply the needed information?

The current ratio is a measurement of performance for evaluating the effective use of resources to deliver a service.

Use the following to answer the following questions. -Referring to the information given, compute the operating margin ratio.

Use the following to answer the following questions. -Referring to the information given, compute the return on assets.

The statement of revenues and expenses and the balance sheet provide the foundation for ____________________ analysis.

The payback method ignores the time value of money.

The manager wants to calculate the operating margin ratio to evaluate the use of the department's resources in achieving its desired goals. What formula (data) should be used?