Quiz CONSOLIDATIONS MERGERS AND CAPITAL FORMATION

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Feb 20, 2024

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Quiz: Consolidations, Mergers, and Capital Formation An HMO has just proposed to promote your facility as the region's “Center of Excellence” for obstetrical deliveries. The HMO covers 700,000 lives in the community served by your facility. The HMO has provided the following information for your consideration: The hospital cost for a normal uncomplicated child delivery is $1,800 and for a complicated cesarean delivery is $3,500. Furthermore, the annual rate per 100,000 lives for a normal uncomplicated delivery is 6.0 while for a complicated cesarean delivery is 1.5. The HMO proposes a capitated per member per month (PMPM) premium to the hospital to provide obstetrical services to their members. What would the break-even premium be? $0.01783 PMPM $0.01830 PMPM $0.01336 PMPM $0.016050 PMPM None of these is correct. From a hospital's perspective, what is most likely to be the highest risk arrangement with a payer? DRG/per case Capitation Per diem Discounted charges
None of these is correct. SKF Primary Care Clinic is deciding whether to purchase MRI equipment that would enable it to perform MRI imaging services in-house rather than sending its patients to its competitor's hospital 3 miles away. From a financial position, if SKF were to make its decision without using net present value analysis, the clinic would need to know (or at least reasonably estimate) which of the following information? NOT. Unavoidable fixed cost, volume, variable costs, and indirect costs Variable costs, volume, avoidable fixed cost, and total revenue Total unit cost, indirect costs, profit, and volume Revenue per unit, indirect costs, volume, and total revenue Avoidable fixed costs, revenue per unit, volume, and contribution margin Calculate the break-even price from the following information. Quantity of services = $3,000 Fixed costs = $45,000 Average cost per unit = $150 Required profit = $30,000 NOT $175 $300 $135 $310 $160
When considering how changes in volume affect total fixed costs, it is important to consider: the relevant range. the variable cost per unit. price. the relevant range and the variable cost per unit. The break-even point occurs where: total fixed costs and total revenue intersect. total costs and total revenue intersect. total profit margin and total costs intersect. total variable costs and total revenue intersect. total revenue outpaces total avoidable fixed costs. Which of the following is the primary source of information regarding what future costs will be and is therefore of critical importance? Specific DRG Encounter of care Historical costs Existing costs
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Which of the following represents the final level of bundling in which risk is fully shifted to the provider? Capitation Episode level Encounter level Individual service arrangements Which of the following is the underlying core of ABC cost systems? Accountability Responsibility Traceability NOT Reproducibility What phase of operations involves a translation of the product-line decisions made earlier into a set of resource expectations? Planning phase Budgeting phase Control phase Production phase Which of the following is the primary cost object in most healthcare firms?
Specific DRG Encounter of care Episode of care NOT A covered life The statistics budget: forecasts operating revenues that will be earned during the budget period. identifies the amount of service that will be provided by departmental area . represents an organization's expected cash inflows and outflows based on the previous years' cash flows. identifies operating expenses that are expected to be incurred during the budget period. Because prices are often fixed in the healthcare industry, it is increasingly important to: measure effectiveness . measure efficiency. control costs. None of these is correct. Flexible budgets vary from static (or forecasted) budgets on the basis of:
revenues. expenses. income. cash flow. volume . Which budgetary issue causes the most strife in all areas of a healthcare organization? Setting volume levels Setting prices Allocation of indirect costs Deciding whether to use a fixed or flexible budget Effectiveness is a relationship between: outputs and organizational goals. NOT inputs and outputs. inputs and organizational goals. None of these is correct. Which of the following is an important analytical tool that has become useful to managed care firms that are seeking to monitor and control their costs?
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Cost analysis Volume analysis Efficiency analysis Variance analysis Successful use of which of the following requires a sound system of standard setting, or budgeting, and a related system of cost accounting? Utilization analysis Volume analysis Efficiency analysis Cost variance analysis Measuring which of the following has become increasingly important in the healthcare industry as a result of the emphasis on cost containment? Efficiency Productivity NOT Competency Profitability Which of the following reflect the quantity of resources that should be used and the prices that should be paid for those resources to produce a specific departmental output unit, defined as a service unit?
Standard cost profiles Actual cost profiles Budgeted cost profiles Expected cost profiles Which of the following most likely will lead to an increase in costs, but this increase in costs may be offset by an increase in revenues, and profits may actually improve? Increase in enrollment Increases in utilization Changes in patient mix Changes in efficiency What type of merger involves firms engaged in unrelated business activity? Horizontal mergers Vertical mergers Conglomerate mergers Leveraged mergers Which of the following is defined as the price or value paid for a business less than the fair market value of the tangible assets acquired?
Goodwill Book value Market value Enterprise value What type of transaction occurs if the shares are owned exclusively by the acquiring party rather than third-party investors and there is no market for trading its shares? Going private Joint venture NOT Leveraged buyout Management buyout Which of the following has continued to lead all healthcare sectors for M&A activity? Urgent care clinics Ambulatory surgery centers Long-term care facilities NOT Pharmacy benefit management Which of the following represents the value of all capital invested in the business or organization? Book value
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Market value Terminal value Enterprise value What type of financing has been the largest source of capital for the hospital industry for the last 30 years, although this type is primarily available to nonprofit facilities? Microloans Crowdfunding Venture capital Tax-exempt financing Which of the following is defined as the fixed return of a long-term debt instrument? Coupon rate Discount rate Variable rate Ordinal rate What section in an indenture defines the conditions that must be satisfied before a firm can issue any additional debt?
Depreciation reserve Debt service reserve Additional parity financing Case statement Which of the following is the process of voiding existing indenture covenants and removing the bonds from the issuer's financial statements? Refunding Defeasance Malfeasance Nonmaleficence In a merger or acquisition, the easiest task for the managers is the integration of the two firms. True False A conglomerate merger is one in which a buyer buys a closely related firm. True False Leveraged buyouts (LBOs) involve the purchase of the entire public stock interest of a firm, or division of a firm, financed primarily with equity.
True False A merger produces an economic gain only if the two firms are worth more together than apart. True False A vertical merger involves two firms operating in the same kind of business. True False
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