CHFM Finance and Budgeting 3

Question 1

A healthcare facility's total revenue is $8 million and total expenses are $7.2 million. What is the operating margin?

Accepted Answer

10.0%

Answer

Operating margin = (Revenue − Expenses) / Revenue × 100 = ($0.8M / $8M) × 100 = 10.0%.

Question 2

Which budget type is rebuilt from zero each fiscal year, requiring managers to justify every line item regardless of prior spending?

Accepted Answer

Zero-based budget

Answer

Zero-based budgeting starts from a 'zero base' and requires justification for all expenses rather than adjusting prior-year figures.

Question 3

A facility manager wants to compare the actual cost per square foot of maintenance against peer hospitals. This is best accomplished through:

Accepted Answer

Benchmarking

Answer

Benchmarking compares a facility's performance metrics against industry peers or best-practice standards.

Question 4

In healthcare facility finance, the term 'encumbrance' refers to:

Accepted Answer

Funds committed but not yet spent for a specific purpose

Answer

An encumbrance is a reservation of budget funds for a purchase order or contract that has been authorized but not yet paid.

Question 5

A hospital issues revenue bonds to finance a new wing. The primary source of repayment for these bonds is:

Accepted Answer

Hospital operating revenues

Answer

Revenue bonds are repaid from the operating revenues of the project or facility, not from tax receipts or government appropriations.

CHFM - Certified Healthcare Facility Manager Practice Test