When Evaluating the Financial Condition of Health Care Entities, the Cushion

question 14

Multiple Choice

When evaluating the financial condition of health care entities, the cushion ratio provides:

• A) A measure of the capital structure of the organization.
• B) A measure of how efficiently an organization pays its bills.
• C) A measure of the efficiency of the collections function.
• D) An indicator of the profitability of the organization.

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Definitions:

Financial Slack

The availability of excess funds or resources in a company that allows for flexibility in operations, strategic investments, or weathering financial uncertainties without immediate financial stress.

Keynes

Refers to John Maynard Keynes, a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and economic policies of governments.

Transactions Reasons

The underlying motives or justifications for conducting financial transactions or business operations.

Opportunity Costs

The price paid for not selecting the immediate alternative choice during decision-making.