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:

Common Stock

Common stock represents shares of ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Acid-Test Ratio

A financial metric used to evaluate a company's short-term liquidity position by comparing its most liquid assets (excluding inventory) to its current liabilities.

Financial Data

Information related to the financial performance and position of an entity, including balance sheets, income statements, and cash flow statements.

Market Price

The current value at which an asset or service can be bought or sold in a marketplace.