Budgets are used as managerial tools. Know various uses of budgets

What is considered the foundation of the budget?

To be most useful, expense must be broken down into _________ and _______ components.

Know the differences as well as (pro's/con's of each) between budgeting approaches/philosophies or techniques:

- "bottom-up" vs. top-down,

- zero-based vs. conventional

Assumptions: Static Flexible Actual

FFS visits 45,000 40,000 40,000

Revenues: $ 900,000 $ 800,000 $ 840,000

Variable costs: 450,000 400,000 400,000

Total CM 450,000 400,000 440,000

Fixed costs 250,000 250,000 230,000

Profit (Loss) $ 200,000 $ 150,000 $ 210,000

Using the above chart:

Looking just at only expenses,

How much is the volume or quantity variance?

-$50,000 + $0 = ($50,000)

How much is the rate or price variance?

$0 + - $20,000 = ($20,000)

Looking at only revenues,

How much is the price or rate variance?

$40,000

How much is the volume/quantity variance?

($100,000)

How much is the total profit variance?

$10,000

The value of any asset is based on its:______________.

The process of computing the future value of a cash flow where we earn interest on interest over multiple years is called:

The process of finding the present value of cash flows to be earned in the future over multiple years is called:

In order to find the Present Value of future cash flows, we need to use an interest rate. What are the various rates we can use and when do we use each?

How do we account for risk or in other words, what tools, techniques do we use to help measure or compensate for risk in doing a capital budgeting analysis?

The accept or reject decision criteria for a project.

Annuity is a stream of cash flows that are of a consistent amount and occur at a consistent interval.

Know the different types of annuities.

In comparing an Ordinary annuity from an Annuity Due, which is greater? When is which one preferred?

In comparing two investments, Investment "A" which pays interest annually at 6% and Investment "B" which pays interest every quarter at 1.5%, which is the better one to invest in?

Financial ratio analysis is useful in several situations, it allows comparability to:

Common size financial analysis - when is it good to use? What is it? How to calculate values either on a balance sheet or an income statement?

Assume our hospital has inpatient charges of $10 million and outpatient charges of $8 million. If we have inpatient admissions of 3,250, what is number of adjusted admissions?

What is the average total operating expense per adjusted admission?