MHA 706 – Midterm Exam (Lord) – Correct Verified
Answers – Complete Exam Study Material
Introduction:
This document contains the complete set of midterm exam questions
for MHA 706, accompanied by correct, verified, and detailed
answers. It covers financial management, accounting principles,
healthcare reimbursement, organizational behavior, quality
improvement, healthcare policy, leadership, and administrative
functions.
It is a comprehensive study resource designed to support exam
preparation and reinforce mastery of core healthcare administration
concepts.
Exam Questions and Answers
Statement of Cash Flows --- correct precise answer ---A financial
statement that provides financial information about the cash
receipts and cash payments of a business for a specific period of
time.
Components of Statement of Cash Flows --- correct precise answer
---operating activities, investing activities, financing activities
Free-Cash Flow Calculation --- correct precise answer ---net cash
provided by operating activities - capital expenditures - cash
dividends
,*Depreciation is a non-cash expense= acts as a tax shield* Just add
depreciation expense to net income, and that will give you free cash
flow.
Net Working Capital (NWC) --- correct precise answer ---current
assets - current liabilities
Depreciation Calculation --- correct precise answer ---(cost -
salvage value) / useful life
Financial Ratio Categories --- correct precise answer ---
profitability, liquidity, debt management, and asset management
Profitability --- correct precise answer ---Is the business generating
sufficient profits?
Liquidity --- correct precise answer ---Can the business meet its
cash obligations?
Debt Management --- correct precise answer ---Right mix of debt
and equity?
Asset Management --- correct precise answer ---Does the business
have the right amount of assets for its patient volume?
,If you were a vendor -what type of ratios would you be most
interested in? --- correct precise answer ---liquidity-do you have
enough money to pay me?
Return on Assets Ratio (ROA) --- correct precise answer ---net
income/average total assets
total margin ratio --- correct precise answer ---net income/total
revenue
Return on Equity (ROE) --- correct precise answer ---Net
Income/Total Equity
Current Ratio --- correct precise answer ---current assets/current
liabilities
Days Cash on Hand Ratio --- correct precise answer ---(Cash +
Short-Term Investments)/(Expenses - Depreciation)/365
Debt Ratio --- correct precise answer ---Total Debt/Total Assets
Debt to Equity Ratio --- correct precise answer ---Total Debt/Total
Equity
, Debt to Capitalization Ratio --- correct precise answer ---Long-term
debt/Long-Term debt - Equity
times interest earned ratio --- correct precise answer ---
EBIT/Interest
Fixed Asset Turnover Ratio --- correct precise answer ---total
revenue/ net fixed assets
Days in Patient Accounts Receivable --- correct precise answer ---
Net patient accounts receivable/(net patient service revenue/365)
Average Age of Plant --- correct precise answer ---accumulated
depreciation / depreciation expense
Contribution Margin --- correct precise answer ---Sales - Variable
Costs
break even volume --- correct precise answer ---fixed cost/(price-
variable cost)
variable costs --- correct precise answer ---costs that vary directly
with the level of production
Answers – Complete Exam Study Material
Introduction:
This document contains the complete set of midterm exam questions
for MHA 706, accompanied by correct, verified, and detailed
answers. It covers financial management, accounting principles,
healthcare reimbursement, organizational behavior, quality
improvement, healthcare policy, leadership, and administrative
functions.
It is a comprehensive study resource designed to support exam
preparation and reinforce mastery of core healthcare administration
concepts.
Exam Questions and Answers
Statement of Cash Flows --- correct precise answer ---A financial
statement that provides financial information about the cash
receipts and cash payments of a business for a specific period of
time.
Components of Statement of Cash Flows --- correct precise answer
---operating activities, investing activities, financing activities
Free-Cash Flow Calculation --- correct precise answer ---net cash
provided by operating activities - capital expenditures - cash
dividends
,*Depreciation is a non-cash expense= acts as a tax shield* Just add
depreciation expense to net income, and that will give you free cash
flow.
Net Working Capital (NWC) --- correct precise answer ---current
assets - current liabilities
Depreciation Calculation --- correct precise answer ---(cost -
salvage value) / useful life
Financial Ratio Categories --- correct precise answer ---
profitability, liquidity, debt management, and asset management
Profitability --- correct precise answer ---Is the business generating
sufficient profits?
Liquidity --- correct precise answer ---Can the business meet its
cash obligations?
Debt Management --- correct precise answer ---Right mix of debt
and equity?
Asset Management --- correct precise answer ---Does the business
have the right amount of assets for its patient volume?
,If you were a vendor -what type of ratios would you be most
interested in? --- correct precise answer ---liquidity-do you have
enough money to pay me?
Return on Assets Ratio (ROA) --- correct precise answer ---net
income/average total assets
total margin ratio --- correct precise answer ---net income/total
revenue
Return on Equity (ROE) --- correct precise answer ---Net
Income/Total Equity
Current Ratio --- correct precise answer ---current assets/current
liabilities
Days Cash on Hand Ratio --- correct precise answer ---(Cash +
Short-Term Investments)/(Expenses - Depreciation)/365
Debt Ratio --- correct precise answer ---Total Debt/Total Assets
Debt to Equity Ratio --- correct precise answer ---Total Debt/Total
Equity
, Debt to Capitalization Ratio --- correct precise answer ---Long-term
debt/Long-Term debt - Equity
times interest earned ratio --- correct precise answer ---
EBIT/Interest
Fixed Asset Turnover Ratio --- correct precise answer ---total
revenue/ net fixed assets
Days in Patient Accounts Receivable --- correct precise answer ---
Net patient accounts receivable/(net patient service revenue/365)
Average Age of Plant --- correct precise answer ---accumulated
depreciation / depreciation expense
Contribution Margin --- correct precise answer ---Sales - Variable
Costs
break even volume --- correct precise answer ---fixed cost/(price-
variable cost)
variable costs --- correct precise answer ---costs that vary directly
with the level of production
