What is the A/R ratio if the current A/R balance is $100,000 and the average monthly gross production is $20,000?

The A/R ratio, or accounts receivable ratio, is calculated by taking the current accounts receivable balance and dividing it by the average monthly gross production. In this scenario, the current A/R balance is $100,000 and the average monthly gross production is $20,000.

To find the A/R ratio, perform the following calculation:

A/R Ratio = Current A/R Balance / Average Monthly Gross Production A/R Ratio = $100,000 / $20,000 = 5.0

This result indicates that for every dollar of gross production, there are five dollars in accounts receivable. A higher A/R ratio may suggest that the practice is extending credit to patients or clients and can provide insight into the practice's cash flow and efficiency in collections.

Other options represent different ratios that do not accurately reflect the calculation based on the provided figures. For example, ratios of 0.2 and 0.5 would indicate far lower A/R balances relative to production, which does not align with the figures given. An A/R ratio of 8.0 would imply a much higher level of accounts receivable compared to the gross production, also not supported by the calculations. Thus, the correct answer of 5.0 provides a