Module 7: Management of Financial Resources - Budgeting Types and Strategies

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What are the two major types of budget discussed in the text?

Operational Budget and Capital Budget

Explain the Forecast/Projection Method in operational budgeting.

The Forecast/Projection Method uses historical information and anticipated changes like inflation to make budgeting decisions.

What is the key characteristic of Flexible Budgeting?

The budget is dependent on a variable workload volume.

Describe Zero-Based Budgeting.

Zero-Based Budgeting is based on the institution's goals and objectives, ignoring past allocations. Signup and view all the answers

What aspects are considered in the Forecasting Method for healthcare facility budgeting?

Shifts in patient mix or volume, changes in medical staff composition, changes in business parameters, expansion or cutbacks in services, and population fluctuations. Signup and view all the answers

Why do most facilities start preparing their budgets 6 months before the new budget period begins?

Budget preparation is a tedious process that requires time for thorough planning and analysis. Signup and view all the answers

What is the ratio used to calculate the cost of supply per lab test performed?

Supply expense/Lab Test Performed Signup and view all the answers

What percentage of the laboratory's revenue does the reagent typically account for?

18% Signup and view all the answers

What are the three criteria of a capital budget?

Time Criteria, Price Criteria, Purpose Criteria Signup and view all the answers

What is the purpose of Certificate-of-Need requirements in a healthcare facility?

To control spiraling medical costs and avoid duplication of services. Signup and view all the answers

What types of projects fall under the capital budget?

Projects costing less than a set limit and projects costing above the set limit. Signup and view all the answers

Why is a Certificate-of-Need required from a healthcare facility?

To control spiraling medical costs and avoid overbuilding of hospital beds. Signup and view all the answers

What is the purpose of the manager's justification in a purchasing project decision?

The manager must explain why the project is needed. Signup and view all the answers

How does the Payback Period help in decision-making in healthcare facilities?

It determines how long it will take to recover cash outlays. Signup and view all the answers

What does ARR stand for in the context of financial analysis?

Average Rate of Return Signup and view all the answers

Explain the purpose of Net Present Value (NPV) in investment evaluation.

NPV determines the current value of an investment considering interest, inflation, and anticipated revenue. Signup and view all the answers

What is the significance of Internal Rate of Return (IRR) in decision-making processes?

IRR is a time-adjusted return method. Signup and view all the answers

How do quantitative tools contribute to making purchasing project decisions?

Quantitative tools provide projections, models, and financial analysis to evaluate investments. Signup and view all the answers