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One difference between the internal and external analysis of a health plan's financial information is that

  1. Internal analysis of the health plan can be more detailed and more specific than can external analysis
  2. Internal analysts are more likely than external analysts to want comparative financial data about the health plan
  3. Only internal analysts use trend analysis to analyze the health plan's financial statements
  4. Only internal analysts typically conduct the financial analysis of the health plan themselves

Answer(s): A



The sentence below contains two pairs of terms enclosed in parentheses.

Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have selected. In analyzing its financial data, a health plan would use (horizontal/common size financial statement) analysis to measure the numerical amount that corresponding items change from one financial statement to another over consecutive accounting periods, and the health plan would use (trend/vertical) analysis to show the relationship of each financial statement item to another financial statement item.

  1. Horizontal / trend
  2. Horizontal / vertical
  3. Common-size financial statement / trend
  4. Common-size financial statement / vertical

Answer(s): B



A health plan most likely would use benchmarking in order to

  1. Measure its performance and practices against those of other companies to help identify those practices that will lead to superior performance in a variety of financial and non-financial areas
  2. Calculate the percentage changes in its financial statement items over several consecutive accounting periods
  3. Determine both the direction and velocity of trends in its financial statements
  4. Display only percentage relationships in its financial statements

Answer(s): A



Assume that the Lambda, Mesa, and Novella health plans are equal in every way except that the health plans have obtained equal amounts of net cash inflows from different sources, as shown below:

HealthPlan Source
LambdaFinancing activities
Mesa Investing activities
NovellaOperating activities

From the following answer choices, select the response which indicates the health plan that would most likely be the most attractive to a potential plan sponsor, to a potential creditor, and to a potential investor.

  1. Potential Plan Sponsor = Lambda
    Potential Creditor = Mesa
    Potential Investor = Novella
  2. Potential Plan Sponsor = Lambda
    Potential Creditor = Novella
    Potential Investor = Mesa
  3. Potential Plan Sponsor = Novella
    Potential Creditor = Lambda
    Potential Investor = Mesa
  4. Potential Plan Sponsor = Novella
    Potential Creditor = Novella
    Potential Investor = Novella

Answer(s): D






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