Question Week 3 Assignment 1 HCA301 Healthcare Finance

15 Jun Question Week 3 Assignment 1 HCA301 Healthcare Finance

Question
Week 3 Assignment 1

HCA301 Healthcare Finance

Assignment 1

Resources

Read/review the following resources for this activity:

•Textbook: Chapter 10, 11, 13, 14

•Lecture 1, 2

•File: HCA301 Week 3 Assignment 1 Template.xlsx (in Course Documents)

Introduction

Analyzing costs is both an important and a difficult aspect of a healthcare financial manager’s job duties. Understanding costs and their components can aid financial managers in increasing profits for the healthcare organization and ensuring future successes of the organization.

Activity Instructions

Use the financial information for Metropolis Health System (MHS) located in Chapter 28 and Appendix 28-A to complete the following analyses:

1. Use the following charts to calculate liquidity ratios, solvency ratios, and profitability ratios for MHS:

Liquidity Ratios Numerator Denominator Ratio

Current

Quick

Days Cash on Hand (DCOH)

Days Receivables

Solvency Ratios Numerator Denominator Ratio

Debt Service Coverage (DSCR)

Liabilities to Fund Balance

Profitability Ratios Numerator Denominator Ratio

Operating

Margin (%)

Return on Total Assets (%)

1.Use the template (in Course Documents) to Common Size the MHS statement of revenue and expenses from financial statements located in Appendix 28-A.

2. Why are these calculations important and how can they be used in the decision-making process of healthcare financial managers?

Writing Requirements (APA format)

•Provide all calculations required by the questions for each scenario. Include any narrative required to support or explain your calculations.

•1-inch margins

•Double spaced

•12-point Times New Roman font

•Title page with topic and name of student

Liquidity Ratios

Numerator

Denominator

Ratio

Current

Quick

Days Cash on Hand DCOH

Days in Receivables

Solvency Ratios

Numerator

Denominator

Ratio

Debt Service Coverage Ratio DSCR

#DIV/0!

Liabilities to Fund Debt

0.526

Profitability Ratios

Numerator

Denominator

Ratio

Operating Margin

#DIV/0!

Return on Assets

#DIV/0!

HCA301 Healthcare Finance
Assignment 1

Resources
Read/review the following resources for this activity:

· Textbook: Chapter 7, 8, 9

· Lecture 1, 2

Introduction
Analyzing costs is both an important and a difficult aspect of a healthcare financial manager’s job duties. Understanding costs and their components can aid financial managers in increasing profits for the healthcare organization and ensuring future successes of the organization.

Activity Instructions
Review each scenario and complete the questions for each. Include all calculations and provide any narrative needed to support your calculations.

Scenario 1:
The Metropolis Health System (MHS) has a system-wide training course for nurse aids. The course requires a packet of materials that MHS calls the training pack. Due to turnover and because the course is system-wide, there is a monthly demand for new packs. In addition, the local community college also obtains the training packs used in their credit courses from MHS.

The education coordinator needs to know how much of the cost is fixed and how much of the cost is variable for these training packs. She decides to use the high-low method of computation.

· Question 1:Using the monthly utilization information presented below, find the fixed and variable portion through the high-low method. (10 points)

Month

Number of Training Packs

Cost

January

1,000

$6,200

February

200

$1,820

March

250

$2,350

April

400

$3,440

May

700

$4,900

June

300

$2,730

July

150

$1,470

August

100

$1,010

September

1,100

$7,150

October

300

$2,850

November

250

$2,300

December

100

$1,010

· Question 2:The education coordinator decides that the community college packs may be unduly influencing the high-low computation. She decides to rerun the results, omitting the community college volume.

Month

Total Number of Training Packs

Total Cost

Community College Number Packs

Community College Cost

January

1,000

$6,200

200

$1,240

February

200

$1,820

March

250

$2,350

April

400

$3,440

May

700

$4,900

300

$2,100

June

300

$2,730

July

150

$1,470

August

100

$1,010

September

1,100

$7,150

300

$1,950

October

300

$2,850

November

250

$2,300

December

100

$1,010

a. Using the monthly utilization information presented here, and omitting the community college training packs, find the fixed and variable portion of costs through the high-low method. Note that the college only acquires packs in three months of the year: January, May, and September. These dates coincide with the start dates of their semesters and summer school. (5 points)
b. The reason the education coordinator needs to know how much of the cost is fixed is because she is supposed to collect the appropriate variable cost from the community college for their packs. For her purposes, which computation do you believe is better? Why? (5 points)

Scenario 2:
The Mental Health program for the Community Center has just completed its fiscal year end. The program director determines that his program has revenue for the year of $1,200,000. He believes his variable expense amounts to $205,000 and he knows his fixed expense amounts to $1,100,000.

· Question 1:Compute the contribution margin for the Community Center Mental Health Program. What does the result tell you about the program? (10 points)

· Question 2:Compute the profit-volume ratio for the Community Center Mental Health Program. What does the result tell you about the program? (10 points)

Scenario 3:
Assume that MHS purchased equipment for $600,000 cash on April 1 (the first date of its fiscal year). This equipment has an expected life of 10 years. The salvage value is 10% of cost. No equipment was traded in on this purchase.

· Question 1:Compute the straight-line depreciation for this purchase (10 points)

· Question 2:Compute the double-declining balance depreciation for this purchase. (10 points)

Writing Requirements (APA format)

· Provide all calculations required by the questions for each scenario. Include any narrative required to support or explain your calculations.

· 1-inch margins

· Double spaced

· 12-point Times New Roman font

· Title page with topic and name of student

Assignment 2: Small Group Project