Posted: November 28th, 2016

Which of the following is not a way Just-in-Time inventory systems can reduce total overall costs to both the purchaser and supplier? a. Reduced service levels (shorter hours, closed on weekends, etc.), b. Shifting warehouse costs to the supplier, c. Economies of scale, d. All of the above can reduce costs.

Which risk does not affect the managers of a business? a. Stand-alone risk, b. Market risk, c. Total risk, d. none of the above. 2. Which risk is measured by the standard deviation of profitability? a. Stand-alone risk, b. Market risk, c. Total risk, d. none of the above. 3. Which risk should wise investors be most concerned with? a. Stand-alone risk, b. Market risk, c. Total risk, d. none of the above. 4. Which risk can be mostly avoided through diversification? a. Stand-alone risk, b. Interest rate risk, c. Market risk, d. none of the above. 5. Which risk is measured by its beta? a. Stand-alone risk, b. Market risk, c. Total risk, d. none of the above. 6. Which of the following is a Qualitative risk assessment? a. Surveys, b. Market beta, c. Sensitivity analysis, d. Standard deviation of profitability. 7. Sensitivity analysis: a. Provides profitability breakeven analysis, b. Provides direction once a project has started, c. Identifies input variables that are most critical, d. All of the above. 8. The certainty equivalent method: a. Adjusts cash flows for risk, b. Uses a risk-free discount rate, c. Is more difficult to implement than a risk-adjusted discount rate, d. All of the above. 9. Which of the following is NOT true regarding capital rationing? a. From a financial theory perspective, for for-profit firms there is no basis for it, b. Safe projects are always chosen over risky projects, c. It refers to having limited capital for projects, d. The profitability index is a useful tool. 10.In capital budgeting analysis of profitable projects, higher risk is most easily incorporated by a. Adjusting the interest rate higher, b. Adjusting the interest rate lower, c. Adjusting the cash flows higher, d. Adjusting the cash flows lower, e. None of the above. 11.Which of the following is not a short-term asset? a. Cash, b. Inventory, c. Accounts payable, d. Accounts receivable. 12.Which of the following is not a way Just-in-Time inventory systems can reduce total overall costs to both the purchaser and supplier? a. Reduced service levels (shorter hours, closed on weekends, etc.), b. Shifting warehouse costs to the supplier, c. Economies of scale, d. All of the above can reduce costs. 13. When considering the Revenue cycle, which factors add to the Healthcare industry problems? a. Uninsured Patients, b. Regulatory Pressures c. Limited Access to Capital d. Inefficient Administrative Processes e. All of the above 14.Extended collection periods are a problem because a. the time value of money, b. third party payers will forget to pay, c. the HCO will loss business when the bill is finally paid, d. they aren’t really a problem. 15.Which is not part of the Revenue Cycle? a. Advertising for new patients b. Collecting data about the patient c. Capturing charges d. Submitting bills and claims e. All of the above are parts of the Revenue Cycle. 16.Which type of current asset financing policy is riskiest? a. compromise financing policy, b. flexible financing policy, c. restrictive financing policy, d. maturity matching financing policy. 17.If the economy is in a decline, which type of current asset financing should be used? a. compromise financing policy, b. flexible financing policy, c. restrictive financing policy, d. maturity matching financing policy. 18.Which type of current asset financing policy provides the lowest expected return? a. compromise financing policy, b. flexible financing policy, c. restrictive financing policy, d. maturity matching financing policy. 19.What is the best way to control payables disbursements a. lockbox services, b. departmentalization, c. concentration banking. d. payables centralization, 20.Which is not one of the three most popular ways to speed collections? a. Negative float, b. Lockbox services, c. Concentration banking, d. Electronic claims processing. 21.Using financial statements to assess the financial condition of the business is; a. Financial statement analysis, b. Operating indicator analysis, c. Both of the above. 22.Using comparative analysis is best for determining; a. How your firm performed compared to your competitors, b. How your firm performed compared to last year, c. How your competitors performed last year. 23.Using trend analysis is easiest with; a. How your firm performed compared to your competitors, b. How your firm performed compared to last year, c. How your competitors performed last year. 24.Inflation can distort which analysis? a. Comparative analysis, b. Trend analysis, c. Both of the above. 25.A short-term creditor would be most concerned with which category of ratios? a. Liquidity ratios, b. Profitability ratios, c. Debt management ratios, d. Asset management ratios, 26.An investor would be most concerned with which category of ratios? a. Liquidity ratios, b. Profitability ratios, c. Debt management ratios, d. Asset management ratios. 27.A lease that provides for both the financing and maintenance of an asset a. Is a Financial Lease, b. Is an Operating Lease, c. Is neither an Operating Lease or a Financial Lease d. Can be both an Operating Lease or a Financial Lease. 28. The cancelation of a lease would be done most likely by a. The lessor in a Financial Lease, b. The lessee in a Financial Lease, c. The lessor in an Operating Lease, d. The lessee in an Operating Lease. 29. A lease that is a contractual obligation for the lessee a. Is a Financial Lease, b. Is an Operating Lease, c. Is neither an Operating Lease or a Financial Lease, d. Can be both an Operating Lease or a Financial Lease. 30.A lease that is designed to cover the full cost of the leased asset a. Is a Financial Lease, b. Is an Operating Lease, c. Is neither an Operating Lease or a Financial Lease. d. Can be both an Operating Lease or a Financial Lease, PROBLEMS – Solve the following. Show/Explain your work! I. On a typical day,U.C. Stars Vision Center writes $50,000 in checks, which take four days to clear. They receive an average of $60,000 in checks from patients on a daily basis, which take five days to clear. a. (3 Points) What is U.C.’s disbursement float? b. (3 Points) What is U.C.’s collections float? c. (2 Points) What is U.C.’s net float? d. (2 Points) What does this mean for U.C.? II. Meds R Us has just finished evaluating several projects. Their cost of capital is 10%. NPV’s are calculated by the firm’s current cost of capital. Project Cost NPV IRR A $42,000 $10,000 11% B $ 6,000 $-1,000 9% C $30,000 $4,000 12% D $28,000 $8,000 17% E $34,000 $8,000 16% A. (5 Points) With no capital rationing, and assuming the projects are of the same risk, which projects should Meds R Us accept? Why? B. (6 Points) If Meds R Us has a Capital Budget limit of $80,000, and assuming the projects are of the same risk, which projects should they accept? Why? C. (6 Points) Meds R Us now performs a risk assessment of the projects. They adjust for project risk by raising the calculated IRR by 2% for low risk projects, leaving the IRR the same for moderate risk projects, and lowering the calculated IRR by 3% for high risk projects. Without capital rationing, which projects should Meds R Us accept? Why? Risk Project Cost NPV IRR Level A $42,000 $10,000 11% High B $ 6,000 $-1,000 9% Low C $30,000 $4,000 12% High D $28,000 $8,000 17% Mod. E $34,000 $8,000 16% Low D. (6 Points) Considering the risk assessment in Part C above, if Meds R Us has a Capital Budget limit of $80,000, which projects should they accept? Why? III. Consider the following financial statements for nonprofit Dispatch & Patch Emergency Services: Dispatch & Patch Emergency Services Statement of Operations and Change in net Assets Year Ended December 31, 2011 Revenue: Insurance Proceeds $30,000 Co-Payments 4,500 Interest and Other Income 300 Total Revenues $34,800 Expenses: Salaries and Benefits $20,000 Depreciation 2,000 Provision for Bad Debts 1,500 Supplies 1,300 Insurance 1,000 Interest 200 Total Expenses $26,000 Net Income $ 8,800 Net Assets, January 1, 2010 $ 400 Net Assets, December 31, 2010 $ 9,200 Dispatch & Patch Emergency Services Balance Sheet December 31, 2011 Assets: Cash $ 2,200 Patient Accounts Receivable 1,200 Supplies 100 Total Current Assets $ 3,500 Net Fixed Assets $18,400 Total Assets $21,900 Liabilities: Accounts Payable $ 2,300 Accrued Expenses 1,400 Current Long-term debt 1,000 Total Current Liabilities $ 4,700 Long-term Debt $ 8,000 Total Liabilities $12,700 Net Assets (Total Equity) $ 9,200 Total liabilities and Net Assets $21,900 Assume the industry average ratios are: Total margin 3.5% Total Asset Turnover 2.0 Equity Multiplier 3.0 Return on Equity (ROE) 21.0% Return on Assets (ROA) 7.0% Current Ratio 1.2 Days Cash on Hand 40 days Average collection period 10 days Debt ratio 67% Debt-to-Equity ratio 2.0 Times Interest Earned 3.2 Fixed Asset Turnover 6.0 A. (6 Points) Perform a Du Pont analysis on Dispatch & Patch. Comment on what the results imply. B. (21 Points) For Dispatch & Patch, calculate the following ratios and give a one or two sentence comment on what the value of each of their ratios means in light of the industry average: 1. Return on Assets Value: 2. Current Ratio Value: 3. Days Cash on Hand Value: 4. Average collection period Value: 5. Debt-to-Equity ratio Value: 6. Times Interest Earned Value: 7. Fixed Asset Turnover Value: