Answer Key for Homework Assignment 1 Question 1: What is the difference in the financial management responsibilities of the controller and treasurer? Answer: Answers should focus around the following themes: The controller focuses on internal financial management functions such as (1) budgeting, forecasting and planning, (2) preparation of financial statements and reports, (3) analyze revenues and expenses, (4) determine payroll taxes, (5) determine internal control procedures. The treasure focuses on external financial management functions such as (1) managing investment (2) managing investor relations with creditors and credit rating agencies (3) secure short-term and long- term financing needs, (4) establish billing, credit, and collection policies and (5) managing risk. Question 2: What is the primary objective of investor-owned (for-profit) firms? Answer: Shareholder wealth maximization (not necessarily profit maximization) Question 3: True or False? A for-profit healthcare organization is subject to federal income taxes while a non-profit healthcare organization is not. Answer: True. Question 4: Culver County Hospital has the lowest cost of any hospital in its region. However, it has continually reported very large operating losses and has depended upon tax support from the county. Assuming that positive operating margins are an objective of Culver County Hospital, the hospital could be described as: Answer: Efficient but not effective.
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