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Healthcare related economics and accounting

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2. For what sorts of inventory and supply items is just-in-time management a reasonable goal? Explain.

3. What are the advantages of leasing?

4. What prevents most health care organizations from initiating commercial paper for short-term financing?

5. What makes the profitability index better than the net present value as a guide for capital rationing decision? What does it take into account that new present value does not?

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2. For what sorts of inventory and supply items is just-in-time management a reasonable goal? Explain.
JIT is designed to achieve high volume production using minimal inventory of raw materials, work in progress and finished goods. Since JIT works on pull process, it requires high levels of quality at each stage of the process, stronger vendor relations and a fairly predictable demand for the end product. Since JIT requires stable schedules over a lengthy time horizon, it requires accomplishing level scheduling, freeze windows and underutilization of capacity. Thus, the reasonable goals for inventory are nearly zero inventory at all stages of production in system and a strong supplier base producing quality and standardized supplies.

3. What ...

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The solution discusses a number of questions relating to just-in-time management, leasing, and health care organizations.

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Healthcare related economics and accounting

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Our study group is working on these pre exam questions and are comparing results. Please carefully review and answer these multiple questions. We will provide a rating after checking responses.

11. Assume that you purchase a 6-year, 8 percent savings certificate for $1,000. If interest in compounded annually, what will be the value of the certificate when it matures?
a. $630.17.
b. $1,469.33
c. $ 1, 677.10.
d. $1,586.87.

12. Which of the following statements about financial ratios is true?
a. With respect to the ratio of assets to equity, a value of 4.0 indicates less risk than a value of 3.0.
b. With respect to an organization's average collection period, the organization would prefer a high value rather than a low value.
c. High coverage ratios indicate a lesser ability to pay interest charges than low coverage ratios.
d. An HMO will most likely have total asset turnover values greater than for an acute care hospital.

13. To increase the level of interest rates, the Federal Reserve:
a. buys treasury securities
b. sells treasury securities
c. mandates that interest rates increase to a prescribed level.
d. Both A and C.

14. Which of the following capital structures most likely describes an investor-owned firm after a leveraged buyout?
a. 100% equity, 0% debt.
b. 50% equity, 50% debt.
c. 2% equity, 98% debt.
d. 0% equity, 100% debt.

15. A medical facility organized as a limited partnership provides the limited partners with which of the following advantages/disadvantages?

I. investment liability is limited only to the money they invest.
II. income is taxed only at their personal income tax level.
III. they can have an active role in management of the partnership.

a. I and II only
b. I and III only
c. II and III only
d. I, II, and III

16. If a firm has five accounting items amounting to: cash of $10,000, accounts payable of $7,000, office building of $65,000, debt of $46,000, then the amount of owner's equity is:
a. $22,000
b. $37,000
c. $128,000
d. $75,000

17 Which of the following statements about inventory and prepaid expenses is true?
a. Inventory is a current asset and prepaid expenses is a current liability.
b. Inventory is a current asset and prepaid expenses is a current asset.
c. Inventory is a current liability and prepaid expenses is a current asset.
d. Inventory is a current liability and prepaid expenses is a current liability.

18. From the point of view of budgets for revenue and cost, responsibility centers have:
a. revenue centers only
b. cost centers only
c. revenue and cost centers
d. neither revenue nor cost centers

19. All of the following are candidates for investment of excess cash except:
a. U.S. Treasury bills
b. U.S. Treasury bonds
c. Commercial paper
d. Both A and B are not candidates for investment of excess cash.

20. Trade credit terms quoted as "1/20, net 60" carry an opportunity cost of:
a. 9.125%
b. 18.25%
c. 36.5%
e. 4.5625%

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