Question

As an office manager, if you had to pick three practice management ratios to do on a monthly basis, which three would you pick? do you think that one of the practice management ratios is the most important than the others? why?

Answer 1

As an office manager there are ratios and reports that need to be monitored on a monthly basis while others are part of the year-end report and review. The ratios that are being chosen are Current Ratio, Operating Margin and Working Capital. The one of the practice management ratios that is the most important is the Current Ratio or also known as Solvency Ratio. Current in a financial report indicates that it can either exchange the asset to cash within a one-year period or the liability is due within one year. Current assets are assets that can be changed to cash within one year. Current assets are cash, cash equivalents, accounts receivable, bad debt allowance, and any inventory that is on hand. Current liabilities are notices that must be funded within one year. Current liabilities are all notes and accounts payable due within one year, interest payable, wages payable, and income taxes payable. It is an signal of the business ability to pay back its short term accountability. To obtain this, the business should take all the current assets and distribute to current accountability. If the current ratio is less than one, this specifies the company has more debt due within one year than it has assets it can use to pay those debts.