RCAL TEST PAPER QUESTIONS AND SOLUTIONS 2025/2026
GRADED A+
✔✔Acid Test Ratio - ✔✔Cash, current investments, and accounts receivable divided by
current liabilities; measures the availability of liquid current assets to pay current
liabilities
✔✔Working Capital Ratio - ✔✔Do you have enough short term assets to cover
immediate liabilities
✔✔Cash Flow Ratio - ✔✔Less than 1 then you are screwed
✔✔Deferred Revenue - ✔✔divide this by cash+savings. If deferred rev is exceeds
cash+savings you may be spending restricted funds
✔✔Return on Equity (ROE) - ✔✔Net Income/Total Equity: long term growth
✔✔collection ratio - ✔✔AR/365: average number of days to to collect
✔✔Asset Turnover - ✔✔Revenue/Total Assets
✔✔debt to assets ratio - ✔✔total liabilities/total assets
✔✔Cash Flow Statement - ✔✔Acts as a checkbook that reconciles the balance sheet
and the income statement
✔✔Cash flow - ✔✔Operating- revenue and expenses day to day
Investments-money market fund earned/spent
Financing-cost to refinance, purchase capital equip
✔✔Service Quotient - ✔✔Service rev over service cost. If less than 1 then services are
being delivered at a loss
✔✔Valuation - ✔✔Value is 'R' capital rate over 'I' income rate.
✔✔budget - ✔✔Develop, implement, and evaluate the budget, including rev, exp, and
cap ex
✔✔Financial Management - ✔✔Plan, direct, evaluate and monitor
✔✔profit margin - ✔✔net income/net sales
A low profit margin can indicate pricing strategy and/or an impact the competition is
having.
, ✔✔steps in the budgeting process - ✔✔-assess the environment: what's going on
-programming: build a set of assumptions
-develop operating budget
-build cash budget (12 months)
-determine cap budget
✔✔Revenue Methods - ✔✔Levels of care, all inclusive, or ala carte
✔✔break-even point - ✔✔Total cost must equal total revenue.
✔✔PPD - ✔✔per patient day
✔✔Debt Coverage Ratio - ✔✔A debt of 1:1 or higher indicates sufficient cash flow
NOI/total debt service
✔✔property and casualty insurance - ✔✔Property damage or damage to property of
others
✔✔Professional Liabilty - ✔✔Bodily injury or property damage
✔✔Occurrence vs. Claims-Made - ✔✔Occurrence: injuries/damages during the policy
term, regardless of when claim is made
Claims-Made: claim made in the current policy year could be charged against a prior
policy year.
Mr. B files a claim today for a broken leg last policy year. Under occurrence his claim
would be paid under current policy. Under claims-made his claim would be paid against
the previous policy.
✔✔Limits of Liability - ✔✔The maximum amount of money the insurance company will
pay for a particular loss, or for loss during a period of time.
✔✔Bodily injury, property damage, medical payments, collision, and comprehensive
coverage for physical vehicle damage are all types of what? - ✔✔Auto Insurance
✔✔Directors and Officers Liability Insurance - ✔✔Wrongful act, securities act,
employment practices act. Typically covers errors/omissions.
✔✔Monitoring systems - ✔✔Revenue management, purchase and expense
management, financial performance to budget, cash management, benchmarking.
GRADED A+
✔✔Acid Test Ratio - ✔✔Cash, current investments, and accounts receivable divided by
current liabilities; measures the availability of liquid current assets to pay current
liabilities
✔✔Working Capital Ratio - ✔✔Do you have enough short term assets to cover
immediate liabilities
✔✔Cash Flow Ratio - ✔✔Less than 1 then you are screwed
✔✔Deferred Revenue - ✔✔divide this by cash+savings. If deferred rev is exceeds
cash+savings you may be spending restricted funds
✔✔Return on Equity (ROE) - ✔✔Net Income/Total Equity: long term growth
✔✔collection ratio - ✔✔AR/365: average number of days to to collect
✔✔Asset Turnover - ✔✔Revenue/Total Assets
✔✔debt to assets ratio - ✔✔total liabilities/total assets
✔✔Cash Flow Statement - ✔✔Acts as a checkbook that reconciles the balance sheet
and the income statement
✔✔Cash flow - ✔✔Operating- revenue and expenses day to day
Investments-money market fund earned/spent
Financing-cost to refinance, purchase capital equip
✔✔Service Quotient - ✔✔Service rev over service cost. If less than 1 then services are
being delivered at a loss
✔✔Valuation - ✔✔Value is 'R' capital rate over 'I' income rate.
✔✔budget - ✔✔Develop, implement, and evaluate the budget, including rev, exp, and
cap ex
✔✔Financial Management - ✔✔Plan, direct, evaluate and monitor
✔✔profit margin - ✔✔net income/net sales
A low profit margin can indicate pricing strategy and/or an impact the competition is
having.
, ✔✔steps in the budgeting process - ✔✔-assess the environment: what's going on
-programming: build a set of assumptions
-develop operating budget
-build cash budget (12 months)
-determine cap budget
✔✔Revenue Methods - ✔✔Levels of care, all inclusive, or ala carte
✔✔break-even point - ✔✔Total cost must equal total revenue.
✔✔PPD - ✔✔per patient day
✔✔Debt Coverage Ratio - ✔✔A debt of 1:1 or higher indicates sufficient cash flow
NOI/total debt service
✔✔property and casualty insurance - ✔✔Property damage or damage to property of
others
✔✔Professional Liabilty - ✔✔Bodily injury or property damage
✔✔Occurrence vs. Claims-Made - ✔✔Occurrence: injuries/damages during the policy
term, regardless of when claim is made
Claims-Made: claim made in the current policy year could be charged against a prior
policy year.
Mr. B files a claim today for a broken leg last policy year. Under occurrence his claim
would be paid under current policy. Under claims-made his claim would be paid against
the previous policy.
✔✔Limits of Liability - ✔✔The maximum amount of money the insurance company will
pay for a particular loss, or for loss during a period of time.
✔✔Bodily injury, property damage, medical payments, collision, and comprehensive
coverage for physical vehicle damage are all types of what? - ✔✔Auto Insurance
✔✔Directors and Officers Liability Insurance - ✔✔Wrongful act, securities act,
employment practices act. Typically covers errors/omissions.
✔✔Monitoring systems - ✔✔Revenue management, purchase and expense
management, financial performance to budget, cash management, benchmarking.
