The Operating Ratio Is Calculated as

question 2

Multiple Choice

The operating ratio is calculated as

• A)the loss ratio minus the underwriting cycle lag.
• B)the loss ratio plus the loss adjustment expense ratio plus the commission to premium ratio.
• C)the combined ratio after dividends minus the investment yield.
• D)the combined ratio minus the loss ratio.
• E)none of the options.

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Definitions:

Salary Expense

Salary expense is the cost incurred by a business to compensate its employees, including wages, salaries, and other forms of compensation.

Cash Paid

The total amount of cash disbursed by a company for various purposes, including operating expenses, investing activities, and financing activities.

Operating Activities

Activities that constitute the primary or main activities of an organization, such as production, sales, and distribution.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used, directly showing major classes of gross cash receipts and payments.