Ch. 15 Financial Management Flashcards
(46 cards)
The management of cash transactions
- Includes the receiving, storage, counting, recording, withdrawing and deposit of cash
- When cash is used in a facility, safeguards must be in place to secure it
- Procedures are in place to protect both the managers and the employees who handle cash
Cash Handling
The amount of money in a cash register drawer at the beginning of a shift
Bank or Till
The amount of money at the end of the shift minus the amount of the bank/till
Cash receipts
A banking institution that handles the everyday financial transactions of businesses
- Periodically, the cash receipts must be transferred here
Commercial Bank
Computers that display, record, and print receipts for transactions & serve as a storage unit for cash
- May have bar code scanners and credit/debit card readers
- Must be reconciled periodically with cash receipts
Cash registers
Capable of tracking individual items sold and deducting them from inventory, giving a real-time dimension to the system
- Uses cash registers which are networked with point-of-sale systems
perpetual inventory control
A record of cash transactions made and stored by the cash register
- Paper receipts for customer
- Printed reports
- Older registers store tapes, newer store electronically
- Compared with cash receipts
Cash register tapes
- Each cashier verifies his or her bank
- Each cashier determines cash receipts at the end of shift
- Supervisor or manager verifies the cash receipts and prepares deposit to commercial bank
- Bank staff verify the deposit (and any withdrawals, too)
procedures for reconciling cash
- A limited number of people, sometimes bonded, should have access to cash
- When not being handled, cash should be secured
- Counting money should be done in a secure area by 2 people
- If cash is to be stored on the premises, it should be held in a safe
- Safe combination should be changed each time an employee leaves an organization – voluntarily or involuntarily
- Large amounts of cash should be transported in an armored carrier
Cash handling security
To bind by an agreement to pay a certain amount of money upon failure to complete a job properly; insuring an organization against financial loss
Bonded
Money kept on hand for emergency purchases of minor expenditures that cannot be made through regular vendors in a timely manner
- Enough should be kept on hand for a month’s worth of transactions
- When running low, receipts are exchanged to reimburse the fund
- Some organizations use credit cards instead
Petty Cash
Material Management
Workflow
Workforce
Facilities Maintenance
Management of Utilities
Major Aspects of Cost Control
- Negotiating good prices (not always the cheapest)
- Specifications (does pdt meet standards?)
- Using a prime vendor
- Group purchases
- Just-in-time delivery (don’t keep much inventory on hand)
- Keeping up-to-date records of inventory
- Use of POS system - Secure receiving, storage, and work areas
Material Management cost control
Smooth forward workflow (efficiency)
Economies of scale
Quality control (reduces errors)
Workflow cost control
Measuring and improving productivity
Monitoring work hours and avoiding overtime
Scheduling employees for appropriate tasks
Workforce cost control
Keeping equipment in good working order
- Regularly scheduled cleaning
- Preventative maintenance
Facilities Maintenance cost control
Idle equipment when not in use
Oven & refrigerator gaskets
Well insulated thermal equipment/windows
Energy efficient lighting
Water-conserving fixtures/equipment
Recycling & composting
Management of Utilities cost control
Type of management concerned with minimizing the liability of an organization in areas such as work-related illness, job-induced injury or stress, and products whose performance fails to meet standards
- In healthcare facilities, ensuring patient’s nutritional status does not deteriorate during hospitalization; preventing workplace injury
Risk Management
Operating Statement
Variance Analysis
Break-even Analysis
Profit and Loss Statement (P&L)
Comparative P&L Statement
Balance Sheet
Comparative balance sheet
Types of Financial Reports
A document prepared by the accounting department of an organization at the end of an accounting period that compares actual fiscal performance to the budget
- Should be generated promptly so that results can be used to adjust
Operating Statement
A report prepared by managers to account for budget variances
- Some managers must submit formal reports routinely
- All managers should identify variances on the operating statement, and investigate the causes
- Managers are responsible for determining the cause of variances and intervening, if necessary
Variance Analysis
Any deviation from the budget
budget variances
A study conducted by a manager to determine the number of sales needed (break even point) to prevent an operation from losing money
Should include:
1. Fixed costs: regular expenses that do not vary on a monthly basis (e.g. rent)
2. Variable costs: costs that vary in proportion to the amount of goods produced (e.g. materials)
3. Revenues: income from sales
Break-even Analysis
Equation:
1. Variable costs/revenue = variable cost rate (%)
2. 1- % variable sales = % adjusted non-variable
3. Fixed costs/% adjusted non-variable = break even point
(sample problem on p. 483, or slide 15-16)
A document generated by the accounting department, lists all the actual data accumulated for the accounting period, including both controllable & uncontrollable revenues and expenses. It shows the net profits or losses.
Includes:
- Revenues: Sales less sales tax
- Expenses
- Operating Profit
- Income tax
- Net Profit
Produced for entire organization, not departments. Does not compare to budget – only evaluates ability to earn a profit
Profit and Loss Statement (P&L)
