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PT administration and management > Personal finances and budgeting > Flashcards

Personal finances and budgeting Flashcards

1
Q

Where should emergency funds go?

A

savings account

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2
Q

Describe a money market account.

A

Has a minimal balance requirement, restricted access to the money (6 withdrawals per month).

Higher interest than savings account

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3
Q

What type of account has higher interest rates if you keep money invested for a set period of time?

A

certificate of deposit (CD)

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4
Q

(true/false) Credit unions are for-profit.

A

FALSE (non-profit)

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5
Q

(true/false) Commercial banks are non-profits.

A

FALSE

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6
Q

What kind of bank account has lower fees and better interest rates on savings accounts and loans?

A

Credit union

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7
Q

(credit union/commercial bank) Which one offers more options for banking, retirement, and investment?

A

commercial banks

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8
Q

What is the main reason why you should start saving early?

A

Compounding interest

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9
Q

What does the Rule of 72 do?

A

Helps figure out how soon your investment will double using a specific interest rate

–> divide the interest rate into 72 and it will tell you how many years it will take to double

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10
Q

(credit/debit) cards come directly against your checking account and cannot be used to build credit

A

debit cards

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11
Q

(credit/debit) cards have no interest associated with use of it

A

debit cards

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12
Q

(credit/debit) cards have better protection from fraud compared to the other

A

credit

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13
Q

What is a credit score?

A

a measure of your credit worthiness.

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14
Q

When you apply for credit, the lender will request your credit score from each of the 3 credit bureaus… what are they?

A

Equifax, Experian, Transunion

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15
Q

(true/false) if you do not have a good credit score, your interest rate will be higher

A

true

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16
Q

What are the 5 components of a credit score?

A

Amounts Owed
Payment History
Length of Credit History
New Credit
Credit Max

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17
Q

What is the range of a good credit score?

A

670-800+

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18
Q

What is considered as a poor credit score?

A

< 579

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19
Q

What is the average score of 21-34 y/o?

A

634

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20
Q

What is the average credit score for a 35-49 y/o?

A

655

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21
Q

What is the average credit score for a 50-69 y/o?

A

700

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22
Q

What is the average credit score for a 70+ y/o?

A

730

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23
Q

What is it called when you get added to someone’s credit card?

A

authorized user status

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24
Q

Secured credit cards are backed by what? Why is this?

A

cash deposits –> gives you a chance to borrow and pay back money with a safety net

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25
Q

(true/false) Federal student loan interest rates are NOT based on the credit of individual borrowers, and they stay the same over the course of the loan.

A

true —> interest rates are fixed

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26
Q

What type of federal loan is based on need?

A

direct subsidized

–> Government pays interest as long as the borrower is enrolled in school at least half the time.

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27
Q

what type of loan will cover interest payments for up to 6 months after graduation (grace period)?

A

direct subsidized

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28
Q

What federal loan is not based on financial need?

A

direct unsubsidized

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29
Q

How does direct subsidized and unsubsidize differ?

A

With direct unsubsidized loans, borrowers are responsible for paying interest that accrues during school, grace periods, and deferments.

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30
Q

What federal loan is specifically for graduate students and professional students, or parents of undergrad students and is based on attendance costs and other financial aid the borrower receive?

A

direct PLUS

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31
Q

(true/false) A credit check is not required for a direct plus federal loan.

A

FALSE (it is required)

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32
Q

What type of loan allows borrowers to combine multiple federal student loans into one loan with a FIXED interest rate?

A

direct consolidation

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33
Q

(true/false) Consolidating might take away benefits such as interest rate discounts, principal rebates, and eligibility for loan forgiveness or cancellation.

A

true

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34
Q

What student repayment plan is lower in the beginning and then increase every two years for up to ten years after graduation?

A

Graduated

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35
Q

What type of repayment loan offers a longer loan term – up to 25 years?

A

extended

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36
Q

What repayment plan has the Maximum monthly payment as 10% of discretionary income and is reevaluated every year, and term is extended to 20 years?

A

pay as you earn (PAYE)

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37
Q

What type of repayment plan has your Monthly payment as a % of your discretionary income and is reevaluated every year, and term is extended to 25 years?

A

Income-based repayment (IBR)

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38
Q

What type of repayment plan has your monthly payment is < 20% of discretionary income or what a fixed payment would be on a 12-year loan?

Loan term is extended to 25 years.

A

income-contingent repayment (ICR)

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39
Q

What is the best measure to use when tracking personal financial heath?

A

net worth

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40
Q

How do you calculate net worth?

A

Total assets - total liabilities = net worth

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41
Q

What is an asset?

A

everything you own

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42
Q

What are liabilities?

A

Everything you owe

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43
Q

What is used by banks when looking at mortgages?

A

Debt-to-income ratio

–> the lower, the better

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44
Q

Why is debt-to-income ratio used? How do you calculate it?

A

Shows how well you manage debt

DTI = Monthly debt/ monthly gross income

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45
Q

(gross/net) income is how much you really make

A

gross

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46
Q

(gross/net) income is how much you take home

A

net

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47
Q

What is the PA state tax?

A

3.07%

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48
Q

What is the local tax for annville?

A

1%

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49
Q

What does FICA fund?

A

social security and medicare

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50
Q

What do real estate taxes fund?

A

schools, libraries, public services

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51
Q

What is the sales tax in PA?

A

6%

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52
Q

What is the PA SUI tax?

A

PA unemployment tax

53
Q

definition: flat rate local tax for adults (18 and over)

A

per capita tax

54
Q

(true/false) All locations in the US charge a per capita tax.

A

false

55
Q

What type of tax is used to reduce property taxes?

A

occupational tax

56
Q

definition: money that is collected from paycheck and must be submitted to taxing authority on regular basis

A

payroll taxes

57
Q

How often do you pay interest for a treasury bond?

A

6 months

58
Q

(true/false) you pay regular interest with US savings bonds.

A

False

–> Sold for less than face value and get full value when cashing them in.

59
Q

What type of bond provides funding for state and local government projects?

A

Municipal bonds

60
Q

(true/false) municipal bond interest earned is exempt from federal tax and is usually exempt from state taxes.

A

true

61
Q

Corporate bonds are issued by companies and usually pay (lower/higher) interest than the government bonds

A

higher interest

62
Q
A
63
Q

What bonds are sold to help pay down the national debt and other federal government projects?

A

US government bonds

–> interest earned is exempt from state and local income tax.

64
Q

What bond score is indicative of the bond being the safest and most likely to pay interest?

A

AAA

65
Q

What bond score is indicative of the bond being a high risk and may likely default?

A

C

66
Q

What are monetary policies influencing the supply of money and interest rates?

–> The fiscal policies concerning taxes and government spending

A

macroeconomics

67
Q

What predicts how the markets respond to policies and other influences such as Supply and demand of a product, Inflation, and Unemployment?

A

microeconomics

68
Q

(true/false) The economics of healthcare DOES NOT follow normal economic principles

A

true

69
Q

(true/false) Demand for Healthcare is regular.

A

FALSE (irregular)

70
Q

(true/false) Price does not directly correlate to quality

A

true

71
Q

definition: when a state mandates how many competitors can work in that area of healthcare

A

certificate of need state

72
Q

What is the measure of economic sacrifice?

A

cost

73
Q

definition: Costs that are more intangible, such as time and effort put into equipment maintenance for which no payment is received

A

implicit costs

74
Q

definition: Tangible costs such as wages

A

explicit costs

75
Q

What are the 2 categories of explicit costs?

A

Direct costs, indirect costs

76
Q

definition: cost directly associated with the production of services and goods like supplies

A

direct costs

77
Q

definition: cost indirectly associated with production of services or goods

A

Indirect costs (management salary and back office salaries)

78
Q

What is the additional cost required to provide one more UOS?

–> Critical information for deciding to see one more patient or providing one more UOS is determined by a break even analysis

A

marginal cost (incremental cost)

79
Q

How do you calculate average total cost?

A

Average total cost = total cost/total volume of unit of service

80
Q

What is a technique used to find the specific volume at which a business either makes or loses money (in the red or in the black)?

A

break even analysis

81
Q

What type of analysis is comparing the relative costs of two activities or programs with the same outcome?

A

cost effective analysis

82
Q

definition: the money spent to produce or purchase a product or service that is sold

A

expense

83
Q

definition: revenue from the sale of service or product provided by the company

A

operating revenue

84
Q

What kind of assets are cash and can readily be converted to cash?

A

liquid assets

85
Q

____ assets are assets that require a long conversion period.

A

fixed assets

86
Q

definition: Debts payable to individuals who have provided services to the business on credit

A

accounts payable

87
Q

definition: The value of debts that are held for payment in the future.

A

accrued expenses

88
Q

definition: Loans, indicating the loan amounts and the interest due. Lines of credit, start up capital and mortgages are examples

A

notes payable

89
Q

liabilities Long-term liabilities are liabilities not due or payable within _______. (mortgage and loans)

A

1 year

90
Q

Short term liabilities are liabilities that are repairable within ____ (cleaners and landscaping)

A

1 year

91
Q

What concept refers to the practice of recording financial transactions within an appropriate period of time?

A

accrual

92
Q

What type of accounting is common in small practices where cash flow is critical or when volume is small?

A

cash accounting

93
Q

(true/false) Each financial statement is interrelated, so together they are used to view the financial health, stability, and growth potential of an organization

A

true

94
Q

(true/false) Statements can also be used to compare past to current performance

A

true

95
Q

What months are common for fiscal years to begin/end?

A

january or july

96
Q

definition: a statement of an organization’s financial condition

A

balance sheet

97
Q

definition: The difference between total assets and liabilities that can be positive or negative. Also called net worth.

–> Represents the portion of the assets that belong to the owners

A

owner’s equity

98
Q

How can net worth increase?

A

if the owner invests additional resources into the business or it can increase as a result of profitable operations

99
Q

definition: a report on an organization’s financial performance over a specific period of time

A

income statement

100
Q

What is a key part of any business plan?

A

income statement

101
Q

What is the difference between revenues and expenses?

A

net income or loss from operations

102
Q

What does an income statement compare?

A

Compares monies earned (revenues) to monies spent (expenses)

103
Q

definition: financial statement shows how an organization’s cash position changes over time

A

cash flow statement

104
Q

(true/false) Cash flow statements reports on future incoming or outgoing cash on account

A

FALSE (only actual cash)

105
Q

Cash flow statements states the availability of cash to cover (short/long) term labilities.

A

short term

106
Q

(true/false) Cash flow statements can be prepared for past, present, and future time periods (a pro forma statement)

A

true

107
Q

What does a retained earnings statement provide?

A

additional details on how owner’s equity changed and information on how profits are used in a business

-> Profits are distributed to the owners or reinvested into the business

108
Q

definition: a financial statement that estimates income and expenditures for a specified future time period

A

budget

109
Q

How long does a operating budget cover?

A

1 year

110
Q

How long does a strategic budget cover?

A

3-5 years

111
Q

What is the general sequence for forming a budget?

A
  1. environmental scanning
  2. Identify goals
  3. gather data on estimated costs and revenues
  4. develop a proposed budget
112
Q

definition: The difference between total revenue and total expenses

A

margin

113
Q

definition: a positive margin

A

profit margin

114
Q

definition: a negative margin

A

Loss margin

115
Q

What uses information about past performance and current market trends to set future financial performance targets (3-5 years)?

A

Financial management planning (long-term financial plan)

116
Q

Annual budget planning is a (short/long) term financial plan

A

short term

117
Q

definition: Financial reports used to compare actual performance to budgeted performance

A

performance reporting

–> Deviations are called variance and can be (–) or (+)

118
Q

What is the corrective action for variance as needed?

A

performance variance analysis

119
Q

definition: Identifying the variances in what was budgeted versus what has actually happened is an important aspect in financial management

A

financial analysis

120
Q

(true/false) Variances seen in a financial analysis is a red flag

A

true

121
Q

What ratios help summarize key financial data in a format that is easy to understand and evaluate?

A

financial ratios

122
Q

What ratios help with historical trends?

A

financial ratios

123
Q

definition: Ratio that analyzes how efficient the organization is run and can look at number of days accounts receivable are outstanding (Average days it takes to collect cash from accounts receivable).

A

efficiency ratio

124
Q

definition: Can be calculated for all operating units in a business (net income to total revenue)

A

profitability ratio

125
Q

(true/false) KPIs do not vary by the type of business

A

FALSE (they can)

Some common KPI:
- Number of billed units
- Case Mix
- Average revenue per referral
- Average cost per referral
- Employee benefits as a % of salary
- Number of billable units per diagnosis

126
Q

What is one of the most common KPIs?

A

productivity

–> the amount of a resource consumed in the production of an increment of output

127
Q

How is revenue often generated in a clinic?

A

based on the number of minutes services were provided (UOS)

128
Q

What is the goal of revenue management?

A

to maximize income from operations and investments

–> involves Setting prices (fees) and Identifying the payer(s) for each service or product

PT administration and management (7 decks)

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