white memorial hospital has a debt-to-equity ratio of 0.67. what is the hospitals debt ratio?
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1. Which of the following items are role of a business concern's prepare of financial statements?
a. Income statement
b. Balance canvass
c. Argument of cash flows
d. Both a. and b. above
e. a., b., and c. above
2. True or False: The requirement to provide financial accounting information is driven past the need for outside stakeholders (primarily investors) to have reliable information about the fiscal condition of an organization.
3. Truthful or False: The set of rules and regulations that govern the content and format of financial statements is called Regime Acceptable Procedures (GAP).
4. Which of the following statements about cash versus accrual accounting is most correct?
a. In cash accounting, an consequence is recognized when a cash transaction occurs.
b. In accrual accounting, an effect is recognized when a cash transaction occurs.
c. Most large healthcare organizations apply cash bookkeeping.
d. Most small healthcare organizations use accrual bookkeeping considering it closely matches statements required for income tax purposes.
e. In cash accounting, an result is recognized when the obligation for a cash transaction is created.
5. Which of the following statements most the income argument is nearly correct?
a. It has several alternative names, including the argument of liabilities.
b. It reports the financial status of an arrangement as of a single bespeak in time.
c. It reports the economical profitability of an organization.
d. Its three major sections are operating costs, nonoperating costs, and total (net) costs.
e. Income statements are always prepared annually, but never for shorter periods (for example, quarterly).
half dozen. Which of the post-obit statements about gross and net patient service revenue is about correct?
a. Gross acquirement reports revenue based on chargemaster prices.
b. Net revenue is gross revenue less discounts and clemency care.
c. Internet revenue is gross revenue less discounts, charity care, and bad debt losses.
d. Both a. and b. above are correct.
e. Both a. and c. to a higher place are right.
seven. True or False: Nether accrual bookkeeping, all revenues reported on the income argument represent cash collections.
8. True or False: Under accrual accounting, all expenses reported on the income statement stand for cash costs.
ix. Which of the post-obit statements about income argument expenses is most right?
a. Supplies are expensed (shown) on the income statement when purchased.
b. Supplies are expensed (shown) on the income argument when consumed (used to provide patient services).
c. All lease expense is reported on the income argument.
d. Both a. and c. above are correct.
e. Both b. and c. above are correct.
10. Which of the following statements concerning depreciation expense is about correct?
a. Depreciation expense accounts for the loss of value of inventory.
b. Depreciation expense accounts for the loss of value of securities investments.
c. Depreciation expense accounts for the loss of value of stock-still assets (plant and equipment).
d. For accounting purposes, depreciation expense is calculated past the double declining balance method.
e. For bookkeeping purposes, depreciation expense is calculated by the triple declining balance method.
11. Which of the following statements concerning net income is most correct?
a. Net income is the "lesser line" of the income statement.
b. Net income measures full profitability as defined by accounting rules and regulations.
c. In not-for-profit businesses, the entire amount of cyberspace income is reinvested in the concern.
d. Both a. and b. above are correct.
e. a., b., and c. above are correct.
12. Which of the following statements concerning net income versus cash menstruation is most correct?
a. Net income is a rough measure out of a business organization's cash menses.
b. Net income tin can exist converted into a crude measure of greenbacks flow past adding noncash expenses, typically depreciation.
c. Cyberspace income can be converted into a rough measure of cash flow by adding nonoperating income.
d. Net income tin can be converted into a crude measure of cash flow past calculation the provision for bad debts.
e. None of the above statements are correct.
13. Which of the post-obit statements virtually the organization of the remainder sheet is almost correct?
a. The balance sheet has upper and lower (or left and right) sections.
b. Assets are divided into current and long-term categories.
c. Avails are divided into equity and not-equity categories.
d. Both a. and b. in a higher place are correct.
eastward. Both a. and c. above are correct.
14. True or False: Like the income argument, the residual sheet reports the avails and liabilities of an organization over some period of time.
xv. Which of the following equations all-time describes the accounting identity?
a. Long-term assets = Short-term assets + Equity.
b. Assets = Liabilities + Disinterestedness.
c. Full claims = Liabilities + Equity.
d. Short-term assets = Cash + Receivables.
due east. Long-term liabilities = Notes + Bonds.
16. Which of the following statements about the residual sheet is most correct?
a. The lower (right-hand) department reports cash and other avails.
b. The rest sheet reports on a business concern's operations.
c. The nugget side of the balance canvas is listed in decreasing order of maturity (i.e., longer maturity assets are listed first).
d. The upper (left-hand) department reports liabilities and equity.
due east. None of the higher up statements are right.
17. Presume that the value of diagnostic equipment suddenly falls because of technological obsolescence. How is the balance sheet adapted to preserve the accounting identity?
a. Short-term liabilities are reduced.
b. Long-term liabilities are reduced.
c. Equity is reduced.
d. Inventories are reduced.
e. Cash is reduced.
18. Which of the post-obit statements concerning accumulated depreciation is most correct?
a. Accumulated depreciation is an income statement particular.
b. There is no relationship between depreciation expense on the income statement and accumulated depreciation on the rest sheet.
c. Internet stock-still assets is equal to gross fixed assets plus accumulated depreciation.
d. Accumulated depreciation appears on the balance sheet under the category "Other Avails."
e. None of the in a higher place statements is correct.
19. Which of the following statements concerning the argument of greenbacks flows is most right?
a. Like the remainder canvass, the statement of cash flows is as of a single point in time.
b. The statement of greenbacks flows uses information from both the income statement and the residual sheet.
c. The argument of cash flows has five major sections.
d. The most important line on the statement of greenbacks flows is the "bottom line," the internet increment (subtract) in cash.
e. None of the above statements is correct.
20. Assume that a business organization's balance sail reports full assets of $500,000 and total liabilities of $300,000. Now assume that $20,000 of internet fixed assets (net plant and equipment) are written off due to technological obsolescence. All else the same, what is the full equity of the business after the write-off?
a. $200,000
b. $190,000
c. $180,000
d. $170,000
e. In that location is bereft information given to answer this question.
21. Consider the following balance sheet:
Greenbacks $ 70,000Accounts payable $ 30,000
Accounts receivable thirty,000Long-term debt 20,000
Inventories 50,000Common stock 200,000
Net fixed assets 350,000Retained earnings 250,000
Total assets $500,000Total claims $500,000
Which of the following statements is about right?
a. The business organisation is not-for-profit.
b. The business, in the aggregate over fourth dimension, has been profitable.
c. The business concern is probably using too much debt financing.
d. The business has $450,000 in its equity accounts (mutual stock and retained earnings); thus, it has this much money bachelor to spend on new facilities.
due east. The business organization has a short-term banking company loan outstanding.
22. Consider the following balance sheet:
Greenbacks $ lxx,000Accounts payable $ 30,000
Accounts receivable 30,000Long-term debt twenty,000
Inventories 50,000Common stock 200,000
Net fixed avails 350,000Retained earnings 250,000
Total assets $500,000Total claims $500,000
Assume that the business organization uses $ten,000 of its cash to pay for supplies that were ordered on credit terms and accept already been received and booked (recorded on the balance sheet). Which of the below statements reflects the resulting residue canvas change?
a. There is a change to the left-hand side only.
b. At that place is a change to the right-mitt side simply.
c. The cash account decreases by $ten,000 and the retained earnings account decreases past $x,000.
d. The cash account decreases by $10,000 and the accounts payable business relationship decreases by $10,000.
eastward. The greenbacks business relationship decreases by $10,000 and the supplies account increases by $10,000.
23. Consider the following residue canvas:
Greenbacks $ 70,000Accounts payable $ thirty,000
Accounts receivable 30,000Long-term debt 20,000
Inventories fifty,000Common stock 200,000
Net stock-still assets 350,000Retained earnings 250,000
Full assets $500,000Total claims $500,000
Assume that the business uses $30,000 of its cash to pay salaries. Which of the below statements reflects the resulting balance sheet modify?
a. In that location is a change to the left-hand side only.
b. At that place is a change to the correct-manus side only.
c. The cash business relationship decreases by $30,000 and the retained earnings account is reduced by $30,000.
d. The greenbacks account decreases by $30,000 and the long-term debt business relationship is reduced by $30,000.
eastward. The company does not have the ability to pay $30,000 in salaries.
24. True or False: Fund accounting is used past investor-owned (for-profit) businesses to differentiate between operating funds and retirement funds.
25. Which of the following statements about financial condition analysis is most right?
a. Fiscal status analysis focuses on whether or not an arrangement has the financial chapters to reach its mission.
b. Financial status analysis often results in a list of financial strengths and weaknesses.
c. Fiscal argument analysis uses data contained in an organization'due south financial statements to appraise financial condition.
d. Operating analysis uses operating information to explain financial condition.
e. All of the above statements are correct.
26. True or False: In ratio analysis, a single value has little pregnant. Therefore analysts utilize trend and comparative analyses to help "interpret the numbers."
27. Truthful or False: The primary difference between financial statement analysis and operating analysis is that operating analysis does not utilize benchmarking while fiscal statement assay does.
28. Which of the following statements virtually financial statement analysis is well-nigh correct?
a. The current ratio measures liquidity.
b. Du Pont analysis is based on the fact that render on equity (ROE) can be expressed as the sum of three other ratios (Ratio one + Ratio 2 + Ratio three).
c. It is relatively piece of cake to interpret a ratio in the absence of comparative and trend information.
d. Both a. and b. above are correct.
east. a., b., and c. above are correct.
29. True or False: To create common size financial statements, all income statement items and rest canvass accounts are divided past full assets.
30. Which of the following statements about the limitations of fiscal condition assay is nearly correct?
a. Comparing with industry averages is difficult if the organization operates in several different lines of business.
b. Seasonal factors can misconstrue ratios.
c. Aggrandizement effects can distort ratios.
d. Both a. and b. above are correct.
e. a., b., and c. in a higher place are correct.
a. Kerrigan patient alphabetize
b. Cardinal patient income
c. Fundamental performance indicator
d. Primal person insurance
e. Known performance index
32. True or False: It is always quite easy to determine whether a given ratio value is "good" or "bad."
33. Suppose that 2 hospitals are identical in all means except that Hospital Due north is relatively new while Infirmary O is relatively old. Which of the post-obit statements nigh a comparative financial statement analysis is nigh right? (Hint: Retrieve about the differences in the amount of internet fixed assets carried on the residuum sheet and the amount of depreciation expense reported on the income statement.)
a. Infirmary N will report the college cyberspace income.
b. Hospital Northward will have the higher total nugget turnover.
c. Hospital N will have the higher stock-still nugget turnover.
d. Infirmary North volition have the lower gross stock-still assets.
eastward. None of the higher up statements are correct.
34. Grady Dwelling house Health has a profit margin of 15 pct on sales of $20,000,000. If the business firm has debt of $vii,500,000 and total avails of $22,500,000, what is Grady's return on avails (ROA)?
a. 13.three%
b. 10.9%
c. viii.0%
d. five.3%
eastward. 3.1%
35. A fire has destroyed a large pct of the financial records of the Carter Health System. You take the task of piecing together information to prepare a financial report. Yous have plant the profit margin to be 5.four per centum. If sales were $4 million on total assets of $2 million, and the amount of debt financing was $800,000, what was Carter's return on disinterestedness (ROE)? (Hint: Use the Du Pont equation to reply this question.)
a. 13.8%
b. 18.0%
c. 19.2%
d. 21.6%
e. 25.viii%
36. White Memorial Hospital has a debt-to-disinterestedness ratio of 0.67. What is the hospital's debt ratio?
a. x%
b. twenty%
c. 30%
d. 40%
eastward. 50%
37. Which of the following are basic sources (forms) of capital?
a. Debt
b. Equity
c. Leases
d. Convertible bonds
east. Both a. and b. higher up
38. The cost of debt capital to a business is measured by the:
a. Maturity appointment
b. Involvement rate
c. Amount borrowed
d. Toll of equity
due east. None of the to a higher place
39. True or False: Although many factors influence the interest rate prepare on a loan, the two almost important are risk and inflation.
40. True or Imitation: Long-term debt is defined as having a maturity of more than six months.
41. Which of the following statements about short-term debt is about correct?
a. Short-term debt has higher issuance costs than long-term debt.
b. Brusque-term debt has more restrictions (restrictive covenants) than long-term debt.
c. Short-term debt generally has a lower cost than long-term debt.
d. Most brusque term debt is obtained by issuing bonds to individuals
e. All of the above statements are right.
42. True or Faux: Municipal bonds are substantially the same as corporate bonds. Thus, the coupon (involvement) rate assault a non-for-profit hospital bail will be the same (for all practical purposes) as the rate set on a similar for-turn a profit hospital bail.
43. Which of the following statements nigh debt contracts is about correct?
a. Debt contracts have several different names.
b. Debt contracts typically contain restrictive covenants.
c. All debt contracts proper name a trustee.
d. Both a. and b. above are correct.
e. a., b., and c. above are all correct.
44. True or False: A call provision allows bondholders to tender (plow in) their bonds at any time and receive the main amount in return.
45. Which of the following statements about debt ratings is near correct?
a. The ratings reflect the probability of default.
b. The ratings on outstanding debt are automatically reviewed and updated annually.
c. The ratings are important to investors, but unimportant to issuers.
d. The ratings are based solely on a quantitative analysis of the issuer'south financial condition.
e. The ratings run from A (for the best) to F (for the worst).
46. Which of the post-obit statements near common stock is incorrect?
a. The pre-emptive right gives current stockholders the correct to purchase any new shares issued by the visitor.
b. Stockholders practise control over the company by voting for board members.
c. Common stockholders are the owners of for-profit corporations.
d. The claim of shareholders on the cash flows of the firm is limited to the dividends that they receive, i.east., they take no claim on a business'due south residual earnings.
e. In the event of bankruptcy and liquidation, shareholders often receive nothing.
47. True or False: Although the use of financial leverage (debt financing) can increase the return to the owners of a business concern, it also increases the riskiness of their disinterestedness investment.
48. Which of the following statements near the use of debt financing (fiscal leverage) is incorrect?
a. In most situations, the apply of debt financing increases the return to owners (say, as measured by ROE).
b. In all situations, the use of debt financing increases the riskiness to owners.
c. Capital construction theory allows managers to precisely make up one's mind the optimal capital structure for any for-profit concern.
d. Debt financing allows more of a business'due south operating income to menses through to investors.
e. Because debt financing "levers upwardly" (increases) owners' returns, its use is called financial leverage.
49. Which of the following statements nigh the tradeoff theory of majuscule structure is most correct?
a. The trade-off theory can be used to set a precise optimal structure for any given business.
b. The merchandise-off theory tells us that businesses should use virtually 100 per centum debt financing.
c. The trade-off theory tells united states that businesses should use almost no debt financing.
d. The merchandise-off theory tells us that businesses should apply some debt financing, but non too much.
due east. The trade-off theory has no applicability at all to not-for-turn a profit businesses.
fifty. Which of the following factors influence the judge of a business organization's optimal capital structure?
a. The amount of business organisation (inherent) gamble
b. Lender/rating agency attitudes
c. Manufacture averages
d. The need to maintain financial flexibility (reserve borrowing capacity)
e. All of the to a higher place factors influence the estimate
51. True or False: To minimize the adventure associated with debt financing, permanent assets (land, buildings, and equipment) should be financed with long-term debt while temporary avails (such as a seasonal buildup in inventories) should be financed with short-term debt.
52. True or False: The corporate cost of upper-case letter is a blend (weighted average) of the costs of all of a concern's financing sources.
53. Which of the following statements about cost of upper-case letter estimation is most correct?
a. In general, at least five methods will be used to estimate the toll of debt.
b. The corporate cost of capital is the college of either the cost of disinterestedness or the cost of debt.
c. The corporate cost of capital is used every bit the hurdle (discount) rate for all projects being evaluated in the organization.
d. Considering there is no tax savings associated with debt issued by non-for-profit organizations, information technology is theoretically incorrect to recognize the savings for investor-endemic businesses.
eastward. None of the above statements are right.
54. Which of the following statements regarding the cost of equity is nearly right?
a. The cost of debt is the interest rate assault debt financing, while the cost of equity is divers similarly; information technology is the rate of return required by equity investors.
b. The debt cost plus risk premium method is ane way to estimate the price of equity.
c. The cost of equity for a not-for-profit business is zero.
d. Both a. and b. above are right.
east. a., b., and c. above are correct.
55. True or False: The corporate price of capital provides a benchmark for determining a project's cost of capital. In general, projects that are riskier than boilerplate must accept a price of majuscule that is higher than the corporate cost of capital, while projects that are less risky than boilerplate must take a cost of capital that is less than the corporate cost of majuscule.
56. Generic Wellness Services has a target capital construction of xxx percent debt and 70 percentage equity. Its cost of debt estimate is x percent and its price of equity estimate is sixteen pct. It pays federal, country, and local taxes at a 40 pct marginal rate. What is the firm's corporate cost of capital?
a. six.0%
b. 10.0%
c. 13.0%
d. 14.two%
due east. 16.0%
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1. Which of the following items are role of a concern's set of financial statements? a. Income statement b. Rest sheet c. Statement of greenbacks flows d. Both a. and b. to a higher place e. a., b., and c. above Respond: _e____ 2. True or Simulated: The requirement to provide fiscal accounting information is driven past the need for outside stakeholders (primarily investors) to accept reliable information about the financial status of an organization. a. True b. False Answer: __True___ 3...
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ane. Which of the post-obit items are part of a business concern's set of financial statements? a. Income statement b. Balance sheet c. Argument of cash flows d. Both a. and b. higher up e. a., b., and c. to a higher place Answer: _e____ 2. True or False: The requirement to provide financial bookkeeping information is driven by the demand for outside stakeholders (primarily investors) to have reliable data most the financial status of an organization. a. Truthful b. Simulated Answer: __True___ 3...
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