Lecture #4 (Financial Resource Management)

Question 1

What makes a company “for profit”?

Answer 1

The presence of shareholders in the company (because the company needs to make money in order to pay the shareholders).

Question 2

What is a non-for profit company?

Answer 2

One that takes all of its profits and invests back into itself–it does not give money to shareholders.

Question 3

What is the method ATs use to put their program’s mission into financial terms?

Answer 3

Budgeting

Question 4

What are the two main types of budgeting models?

Answer 4

1) Spending-ceiling model

2) Spending-reduction model

Question 5

What is another name for the spending-ceiling model of budgeting?

Answer 5

Incremental model

Question 6

What is a spending-ceiling model of budgeting?

Answer 6

A type of budget that requires justification only for those expenses that exceed those of the previous budget cycle …this is often due to inflation

Question 7

What is a spending-reduction model of budgeting?

Answer 7

A type of budget used during periods of financial retrenchment that requires reallocation of institutional funds (so it results in reduced spending levels for some if not all programs)

Question 8

What is a zero-based budgeting model? Is it spending-reduction or -ceiling?

Answer 8

A method that requires justification for every budget line item without reference to previous spending patterns…spending-reduction

Question 9

What is fixed budgeting? Is it spending-reduction or -ceiling?

Answer 9

A method in which expenditures and revenues are projected on a monthly basis…spending-ceiling

Question 10

What is variable budgeting? Is it spending-reduction or -ceiling?

Answer 10

A method requiring adjustment of monthly expenditures so that they do not exceed revenues (i.e. patient visits, which are drivers of revenue, can be unpredictable at times)

Question 11

What is lump-sum budgeting? Is it spending-reduction or -ceiling?

Answer 11

A method that allocates a fixed amount of money for an entire program with specifying how it will be spent….could be either…i.e. here’s $10,000 for the year, spend as you see fit

Question 12

What is line-item budgeting?

Answer 12

A method that allocates a fixed amount of money for each subfunction of a program…(i.e. of this $10,000, $1,000 must be used for CEUs, $1,000 for licensures, $6,000 for supplies, etc)

Question 13

What is the first step of planning a budget?

Answer 13

Needs assessment (a systematic set of procedures undertaken to set organizational or programmatic priorities based on identified needs

Question 14

What are the three phases of a needs assessment?

Answer 14

1- Exploration
2- Information gathering
3- Decision making

Question 15

What is capital equipment?

Answer 15

Non-consumables–things not ordered every year like consumables (i.e. modalities, ice scoop, etc.)

Question 16

What can capital equipment be broken down into?

Answer 16

Major and minor equipment (major= depreciation, more pricey, need proposal for approval of purchase, maintenance); (minor=not as pricey, smaller investment)

Question 17

If you’re creative in your purchasing of equipment and items, how much can you save on your budget?

Answer 17

40%

Question 18

True or false: If you are for-profit you are tax exempt.

Answer 18

False, non-for-profits are tax exempt

Question 19

What are some negotiatiable points in purchasing?

Answer 19

Price, supply, quality, shipping, and technical support