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CVPM > Financial > Flashcards

Financial Flashcards

1
Q

Future value

A

The monetary value of some defined investment at some point in the future, given a specified rate of return

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2
Q

Internal rate of return

A

Calculated rate of return, given the cost and future value of an investment

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3
Q

Net present value

A

The net return on a project, given all costs and revenues in terms of the current monetary value

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4
Q

Rate of return

A

The amount an investment, appreciate, or depreciate overtime, often expressed as a decimal or a percentage

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5
Q

Rate of 72

A

Isimple method for estimating the time it would take for an investment to double in value given a fixed compounding annual rate of interest

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6
Q

Net present value

A

Net present value (npv) = PV of all revenues — PV of all costs

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7
Q

Rule of 72 formula

A

T= (ln n)
———
ln(1+r)
T= number of. Required
n= Increase desired
r= interest rate per period

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8
Q

Liabilities

A

Practices debts

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9
Q

Net book value

A

Another name for equity

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10
Q

Cash method

A

Income is recorded when cash is received, not when the services are performed expenses are recorded when the practice makes a payment, not when the expenses incurred

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11
Q

Summary of chart of accounts

A

Detailed list of all accounts regularly used in the normal corse of business, including balance sheets and p&l statements

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12
Q

Profit and loss statement

A

Report detailing revenue expenses to show the net income during that period
Aka income statement

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13
Q

Equity

A

Assets minus liabilities

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14
Q

Straight line deprecation

A

Depreciation is recognized evenly over the life of the item

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15
Q

Modified accelerated cost recovery system

A

System wheee more depreciation is recognized in first few years then less in later years
Method required by US Income tax code

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16
Q

Which system of accounting is considered most accurate

A

Accrual based

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17
Q

The five characteristics of good financial reporting

A
  1. Timeliness
  2. Accuracy
  3. Simplicity
  4. Sufficient detail
  5. analytical relevance
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18
Q

What financial reports does the typical clinic use?

A

Balance sheet
Income statement
Statement of cash flows (smaller clinics might not need this)

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19
Q

Cost evaluation

A

Process of calculating the cost of activities, products or sales

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20
Q

Incremental performance

A

Breaking down performance by department

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21
Q

The difference between the cost of a product in the revenue is generates is called what

A

Gross profit margin

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22
Q

If the end of the year revenue for a practice was 2.4 million and your profit was 312,000 what is your net profit margin percentage?

A

13%

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23
Q

Which expenses are considered more controllable, direct or indirect

A

Direct expenses are usually more control because they were late directly to specific income production

24
Q

An organizations debts, or other obligations, which must be discharged within a short time (usually within the earning cycle or what year) are called what?

A

Current liabilities

25
Q

If the practice currently has $94,250 of cash on hand and the annual operating expenses of the practice are $1,677,000. How many days cash balance do you have an is that a healthy number for the practice?

A

14.6 days as a general rule it is a good business practice to keep 20 to 30 days worth of cash on hand to ensure liquidity issues do not arise.

26
Q

What is the traditional business cycle?

A

Expansion, prosperity, contraction, recession

27
Q

What does the economic cycle impact (3)

A

Consumer confidence
Labor market
Inflation
Which effect the ability to produce revenue

28
Q

In guard to creating a credit policy what are the two policies that you should begin with?

A

Client credit policy
Charge account policy

29
Q

What element should be included in the charge account policy for the practice?
A: the pre-qualification procedures for a client of unknown standing
B: the process for flagging a prequalified client in your practice management system
C: acceptable forms of payment, as well as storage of credit card numbers to be used as a back up guarantee the client agrees to at signing
D: total invoice amount of client can charge without additional approval of management or owners

A

A. B. D

30
Q

True or false
A list of procedures to use, when considering ways of extending credit to clients include creating ranges available, credit amount based on the clients longevity with the practice

A

False

31
Q

What is the consumer price index?

A

A list or index of prices use to measure the change in cost of basic goods or services

32
Q

True or false
The consumer price index can be instrumental in determining the cost of living increase for variety of expenses associated with running a veterinary practice

A

True

33
Q

In relation to see analysis, which of the following elements should be included in the calculation?
A. Variable cost per minute.
B. Staff cost per minute.
C. Veterinary cost per minute.
D. Fixed cost per minute.

A

B. C. D.

34
Q

Marsha Hinke, DVM states ____% of practices have been victims of fraud or embezzlement

A

67.8%

35
Q

True or false
It is recommended that practices do not prosecute, confirmed cases of embezzlement unless the loss is determined to be greater than $2000.

A

False

36
Q

What entity may be a good resource for the practice in the event embezzlement is suspected?
A. The federal trade commission.
B. Your insurance carrier.
C. Business protection agency.
D. All of the above.

A

B.

37
Q

More than __% of gross revenue, as lost to embezzlement in small businesses annually.

A

5%

38
Q

In the budgeting process, normalizing the hospitals expenses refers to
A. looking back at the past three years of revenues and expenses.
B. Projecting the next three years expenses.
C. Removing any large one off expenses from years expenses.
D. Averaging the last three years expenses

A

C. D.

39
Q

True or False
As long as an employee embezzlement is below $1000, It is not worth prosecuting.

A

False

40
Q

When budgeting for start up practice, it is recommended to use the__ percentile of industry benchmarks.

A

25th

41
Q

When comparing revenue and expenses, is it more valuable to determine the % change or the $$ change year over year? 

A

Percentage

42
Q

Which of these represent the determination of financial statement entry relationships and the fractional structure that results provides a concise reference to performance. They are generally used to asses aspects of profitability, solvency and liquidity.
1. Key performance indicators
2. Ratios
3. Percentages
4. contrast parallels

A
  1. KPIs
43
Q

Formula for accounts receivable turnover

A

Credit sales/ average accounts recivable

44
Q

Average accounts receivable formula

A

Beginning accounts receivable + ending accounts receivable/2

45
Q

Days in accounts receivable formula

A

Number of days in period/ accounts receivable turnover

46
Q

What are the five tiers of practice owners compensation?

A
  1. Veterinary salaries
  2. Management salary
  3. Perquisite income
  4. Profits reflected as return on investment in the practice
  5. Equitable distribution of remaining profits among owners
47
Q

The difference between the cost for product and the revenue it generates is called what?

A

Gross profit margin

48
Q

If your end of year revenue for a practice was $2,400,000 and your profit was $312,000, what is your Net Profit Margin?

A

13%

49
Q

What expenses are considered considered more controllable, direct expense air indirect expense?

A

Direct expenses

50
Q

An organization’s debts or other obligations which must be discharged within a short time (usually the earnings cycle, or one year) are called what?

A

Current liabilities

51
Q

If the practice currently has $94,250 I have cash on hand in the annual open expenses of the practice are $1,677,000, how many days cash balance do you have an is that a healthy number for the practice?

A

14.6.
As a general rule, it is good business practice to keep 20 to 30 days worth of cash on hand to ensure quality issues do not arise

52
Q

What is common sizing?
If your practice has $3,691,000 in revenue and $2,952,800 in expenses, how would you express the expenses I’m using common sizing?
Once calculated using the metrics above, is your answer considered within the preferred benchmark for expenses?

A
53
Q

These represent the determination of financial statement, entry relationships in the fractional structure that provides a concise preference to performance. They are generally used to assess aspects of possibility sovereignty and liquidity
1. KPI
2. Ratios
3. Percentages
4. Contrast parallels

A

2 ratios.
Pg 16 financial management

54
Q

Accounting equation

A

Assets= liabilities + owner equity

55
Q

Another name for the p&l

A

Income statement

56
Q

Another name for the income statement

A

P&l

57
Q

Average net income

A

10-12%

CVPM (6 decks)

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