Financial

5. What is considered an ideal cost structure for each of the following types of reimbursement environments to increase profitability?

• Fee for service (volume-based)
• Capitation (member-based)

6. Provide an example of each of the following types of financial ratios and briefly explain/interpret the meaning for each:

• Profitability ratio
• Liquidity ratio
• Debt management ratio
• Asset management ratio

7. For each of the following questions, identify which of the four categories of financial ratios (see question 6) is best used to answer each one:

• Can the organization afford to borrow more money to finance a planned service line expansion?
• How efficiently is the organization making use of its existing plant and equipment?
• Can the organization effectively meet its short-term obligations?
• How effective is the organization at generating a positive return to support its current operations?