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Exam AHM-520 topic 1 question 168 discussion

Actual exam question from AHIP's AHM-520
Question #: 168
Topic #: 1
[All AHM-520 Questions]

The traditional financial ratios that analysts use to study a health plan's GAAP-based financial statements include liquidity ratios, activity ratios, leverage ratios, and profitability ratios.
Of these categories of ratios, analysts are most likely to use:

  • A. Liquidity ratios to measure a health plan's ability to meet its current liabilities
  • B. Activity ratios relate the returns of a health plan to its sales, total revenues, assets, stockholders' equity, capital, surplus, or stock share price
  • C. Leverage ratios to measure how quickly a health plan converts specified financial statement items into premium income or cash
  • D. Profitability ratios to measure the effect that fixed costs have on magnifying a health plan's risk and return
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Suggested Answer: A 🗳️

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