Financial Management Flashcards
6 cards from real CHE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management flashcards as text
Which costing method allocates overhead costs based on the actual activities that consume resources?
Answer: Activity-based costing (ABC)
Activity-based costing allocates overhead and indirect costs to services based on the specific activities that drive resource consumption, providing more accurate cost data.
In healthcare revenue cycle management, the 'clean claim rate' measures:
Answer: Percentage of claims submitted without errors that don't require additional information before payment
The clean claim rate is the percentage of claims that pass all edits and are accepted for processing without requiring additional information or correction.
A break-even analysis for a new healthcare service determines:
Answer: The volume of services needed to cover all fixed and variable costs with no profit or loss
Break-even analysis calculates the minimum volume or revenue at which total costs exactly equal total revenue, resulting in neither profit nor loss.
Uncompensated care in hospitals includes which two components?
Answer: Charity care (free care to the uninsured) and bad debt (unpaid bills)
Uncompensated care consists of charity care provided without expectation of payment and bad debt from patients who had financial responsibility but did not pay.
A healthcare organization's debt-to-equity ratio measures:
Answer: The proportion of financing from creditors relative to the organization's own resources
The debt-to-equity ratio measures how much an organization relies on debt financing compared to equity (net assets), indicating financial leverage and risk.
The purpose of a pro forma financial statement in healthcare planning is to:
Answer: Project future financial outcomes based on assumptions and scenarios
Pro forma statements project future financial performance based on planned activities, assumptions about volume and reimbursement, and strategic initiatives.