The Primary Function of the Governing Body or Board of Directors

question 34

Multiple Choice

The primary function of the Governing Body or Board of Directors in a health care organization is to ensure which of the following?

• A) The employees within the company are treated fairly
• B) The chief operating officer position is properly filled
• C) The proper use of resources
• D) The recruitment of staff is successful
• E) None of these is correct.

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Definitions:

Soft Capital Rationing

Internal limitations set by a company's management on the amount of funding allocated for new projects.

Debt Covenants

Agreements between a borrower and lender that stipulate certain conditions the borrower must adhere to, which can pertain to financial ratios, levels of income, or other financial benchmarks.

Time Value

The idea that having money now is more valuable than having the same sum at a later date because of its ability to earn more over time.

Profitability Index

A financial tool used to determine the relationship between the costs and benefits of a proposed project, calculated by dividing the present value of future cash flows by the initial investment.