CHL Financial Planning and Budgeting 2

Question 1

A healthcare organization uses a rolling budget approach. What is the primary advantage of this method over a static annual budget?

Accepted Answer

It continuously updates forecasts as new periods are added

Answer

It eliminates the need for variance analysis

Answer

It requires less administrative time to maintain

Answer

It locks in spending commitments for the full fiscal year

Question 2

Which financial metric best measures a hospital's ability to service its long-term debt obligations?

Accepted Answer

Debt service coverage ratio

Answer

Current ratio

Answer

Days cash on hand

Answer

Operating margin

Question 3

A CHL is preparing a capital budget request for a new MRI machine. Which cost should be included in the capital budget rather than the operating budget?

Accepted Answer

Purchase price and installation costs

Answer

Annual maintenance contract fee

Answer

MRI technologist salary

Answer

Contrast media and supplies

Question 4

What does a negative operating margin indicate for a healthcare organization?

Accepted Answer

Operating expenses exceed patient care revenues

Answer

The organization is generating surplus revenue from investments

Answer

The organization has insufficient working capital

Answer

Non-operating income is offsetting operating losses

Question 5

In healthcare budgeting, what is 'flex budgeting' designed to address?

Accepted Answer

Variations in volume that affect both revenues and variable costs

Answer

Unexpected capital expenditures mid-year

Answer

Changes in payer mix throughout the fiscal year

Answer

Executive discretionary spending needs

Question 6

A healthcare leader reviews a report showing days in accounts receivable (AR) increased from 45 to 62 days. What is the most likely financial impact?

Accepted Answer

Decreased cash flow and potential liquidity strain

Answer

Improved cash flow and increased liquidity

Answer

Reduced need for short-term borrowing

Answer

Higher net patient revenue on the income statement

Question 7

Which budgeting approach requires each department to justify every expense from zero rather than basing the budget on the prior year's figures?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Performance-based budgeting

Answer

Activity-based budgeting