Chapter 10

Question 1

What is net worth?

Answer 1

• net worth = assets - liabilities (debts)

Question 2

What are fixed and liquid assets?

Answer 2

• fixed asset are cannot be quickly converted into cash such as land or a building.
• liquid assets can be easily converted into cash.

Question 3

What is depreciation?

Answer 3

• an income tax deduction that allows the taxpayer to recover lost cost of owned property or other assets placed in service over time.

Question 4

What are direct costs?

Answer 4

• expenses for delivering services, including salaries, equipment, and clinical supplies.

Question 5

What are indirect costs?

Answer 5

• (overhead) rent or mortgage payments, utilities, janitorial services, equipment maintenance, office supplies, and so on that direct delivery of services.

Question 6

Important information you need when negotiating contracts?

Answer 6

First need to know before entering a contract
- what is the cost per treatment?
- what is my desired profit for treatment?
then you can decide
- how much I am gonna make for this?

Question 7

What is a budget?

Answer 7

• tool for projecting and monitoring revenue and expenses so that managers stay on course financially to meet the organizations goals.

Question 8

What is cash flow?

Answer 8

• the revenue/cash left at the end of each month once all the expenses and revenue have been accounted for.
• important to have enough cash flow each month to cover expenses each month if reimbursement claims are not submitted to be payed in time to pay your business expenses.

Question 9

What is the break-even point?

Answer 9

• the point when revenues equal expenses.

- the projects point (date) at which there is no profit or loss.