HMGT 3311 Final Exam
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1. What is Horizontal Analysis? Compares changes in a given line item between two consecu-
tive periods (i.e., Cash in 20X0 vs. 20X1).
2. What is Vertical Analysis? Relative weight of various line items to a base (i.e., current
assets as a percent of total assets)
3. What is Trend Analysis? Trend analysis extends the concept of horizontal analysis over
multiple time periods, using the first year as the base year.
4. What is the purpose of Ratio Provide information about the financial performance of an or-
Analysis? ganization which goes beyond that which is available from an-
alyzing only one line item at a time.
5. What are the 4 Categories of Liquidity; Revenue, Expense, and Profitability; Activity; and Cap-
Ratios? ital Structure.
6. Liquidity answers? How well is the organization positioned to meet its short-term
obligations?
7. Revenue, Expense and Prof- How profitable is an organization?" and 2) "How effective is it
itability ratios answer? in controlling its operating costs and increasing its operating
revenues?
8. Activity ratios answers? How efficiently is the organization using its assets to produce
revenues?
9. Capital structure ratios an- How are the organization's assets financed?"; and 2) "How able
swers? is the organization to take on new debt?
10. How capital structure ratios Analyze the organization's ability to pay off its long-term debts.
help?
11. How Liquidity ratios help? Analyze the organization's ability to pay off its short-term oblig-
ations
1/6
, HMGT 3311 Final Exam
Study online at https://quizlet.com/_f4zouh
12. What is the function of work- That a health care organization collects its funds, pays its em-
ing Capital ployees, buys its supplies, and pays its creditors. Although
non-current assets provide the capacity to provide service, cur-
rent assets and current liabilities are used to turn that capacity
into service
13. What are the stages of work- 1) Obtaining cash; 2) Turning cash into resources and paying
ing capital? bills; 3) Using the resources to provide services; and 4) Billing
and collecting revenues earned so that the cycle can be con-
tinued. It is important to manage the working capital cycle to
ensure that cash is available when needed.
14. What is aggressive asset mix Approach the health care organization attempts to maximize
strategies? its returns by investing its funds in non-liquid assets such as
buildings and equipment. By minimizing its working capital
in this way, the organization faces increased risk of inventory
stock-outs, lost customers from stringent credit policies, and
lack of cash to pay employees and suppliers.
15. What is conservative asset A health care organization accepts lower returns with high-
mix strategies? er liquidity (typically earned on shorter-term investments) to
minimize its risk of not having sufficient funds to pay current
obligations.
16. What does "1.5/15 net 25" That a 1.5% discount will be given if payment is made within 15
mean? days. "Net 25" means that if the discount is not taken, then the
full amount is due within 25 days. The time between day 15 and
day 25 is called the "net period."
17. Revenue cycle management. Are to accelerate cash receipts and to maximize the ultimate
collectable amount of the accounts receivable.
2/6
Study online at https://quizlet.com/_f4zouh
1. What is Horizontal Analysis? Compares changes in a given line item between two consecu-
tive periods (i.e., Cash in 20X0 vs. 20X1).
2. What is Vertical Analysis? Relative weight of various line items to a base (i.e., current
assets as a percent of total assets)
3. What is Trend Analysis? Trend analysis extends the concept of horizontal analysis over
multiple time periods, using the first year as the base year.
4. What is the purpose of Ratio Provide information about the financial performance of an or-
Analysis? ganization which goes beyond that which is available from an-
alyzing only one line item at a time.
5. What are the 4 Categories of Liquidity; Revenue, Expense, and Profitability; Activity; and Cap-
Ratios? ital Structure.
6. Liquidity answers? How well is the organization positioned to meet its short-term
obligations?
7. Revenue, Expense and Prof- How profitable is an organization?" and 2) "How effective is it
itability ratios answer? in controlling its operating costs and increasing its operating
revenues?
8. Activity ratios answers? How efficiently is the organization using its assets to produce
revenues?
9. Capital structure ratios an- How are the organization's assets financed?"; and 2) "How able
swers? is the organization to take on new debt?
10. How capital structure ratios Analyze the organization's ability to pay off its long-term debts.
help?
11. How Liquidity ratios help? Analyze the organization's ability to pay off its short-term oblig-
ations
1/6
, HMGT 3311 Final Exam
Study online at https://quizlet.com/_f4zouh
12. What is the function of work- That a health care organization collects its funds, pays its em-
ing Capital ployees, buys its supplies, and pays its creditors. Although
non-current assets provide the capacity to provide service, cur-
rent assets and current liabilities are used to turn that capacity
into service
13. What are the stages of work- 1) Obtaining cash; 2) Turning cash into resources and paying
ing capital? bills; 3) Using the resources to provide services; and 4) Billing
and collecting revenues earned so that the cycle can be con-
tinued. It is important to manage the working capital cycle to
ensure that cash is available when needed.
14. What is aggressive asset mix Approach the health care organization attempts to maximize
strategies? its returns by investing its funds in non-liquid assets such as
buildings and equipment. By minimizing its working capital
in this way, the organization faces increased risk of inventory
stock-outs, lost customers from stringent credit policies, and
lack of cash to pay employees and suppliers.
15. What is conservative asset A health care organization accepts lower returns with high-
mix strategies? er liquidity (typically earned on shorter-term investments) to
minimize its risk of not having sufficient funds to pay current
obligations.
16. What does "1.5/15 net 25" That a 1.5% discount will be given if payment is made within 15
mean? days. "Net 25" means that if the discount is not taken, then the
full amount is due within 25 days. The time between day 15 and
day 25 is called the "net period."
17. Revenue cycle management. Are to accelerate cash receipts and to maximize the ultimate
collectable amount of the accounts receivable.
2/6
