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The following information was presented on one of the financial statements prepared by the Rouge health plan as of December 31, 1998:
When calculating its cash-to-claims payable ratio, Rouge would correctly divide its:
Suggested Answer: B
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16 comments · newest first
GA
Gabriele
11 months ago
Cash-to-claims ratio = Cash / (Reported claims + IBNR).
NE
Nelida
11 months ago
Totally with you, Lindsey! B makes the most sense.
LA
Lashaun
12 months ago
Wait, are we really sure about including IBNR? Seems off.
BI
Billy
12 months ago
I think A is the right choice, just reported claims matter.
LI
Lindsey
1 year ago
Definitely B, you need to include IBNR for accuracy.
WI
Wilburn
1 year ago
I'm really torn between options B and D. I feel like IBNR is important, but I'm not sure how to apply it in this context.
DA
Darrin
1 year ago
If I recall correctly, the cash-to-claims ratio is supposed to give a complete picture, so I think it makes sense to include both reported claims and IBNR.
VI
Virgie
1 year ago
I think we practiced a similar question where we had to decide if IBNR should be included. I feel like it should be part of the calculation.
EL
Eleonore
1 year ago
I remember we discussed the cash-to-claims payable ratio in class, but I'm not sure if it includes IBNR claims or just reported claims.
DY
Dyan
1 year ago
Okay, I think I've got it now. The cash-to-claims payable ratio is asking me to divide the cash by the total claims, so that includes the reported claims and the IBNR. I'm feeling more confident about this now.
RO
Roosevelt
1 year ago
Based on the information given, I believe the correct answer is B. We need to divide the cash by the total claims, which includes both the reported claims and the IBNR. That will give us the true cash-to-claims payable ratio.
BR
Brinda
1 year ago
I'm a little confused about the IBNR component. Do I need to include that in the denominator, or just the reported claims? I want to make sure I get this right.
AL
Aliza
1 year ago
Hmm, this seems like a straightforward ratio calculation, but I want to make sure I understand the components correctly. I'll need to carefully review the information provided.
AL
Alysa
1 year ago
Okay, the key here is to figure out what the "cash-to-claims payable ratio" is asking for. I think it's asking me to divide the cash by the total claims, which would include the reported claims and the IBNR.
DO
Dorothy
1 year ago
The key here is to focus on the terms "current" and "fixed" in the answer choices. That should help me identify the correct definition of net working capital.
SI
Simona
1 year ago
Hmm, I'm not entirely sure about this one. I know we covered CDBs and PDBs in class, but I'm having trouble applying that knowledge to this specific scenario. I'll have to think it through carefully.