Term
| Advantages and Disadvantages of Sole proprietorship: |
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Definition
Advantages and Disadvantages of Sole proprietorship:
Advantages: Sole owner, low start up cost
Disadvantages: Unlimited liabilities |
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Term
Advantages and Disadvantages of a partnership:
Advantages:
Disadvantages: |
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Definition
Advantages and Disadvantages of a partnership:
Advantages: Share skills and knowledge
Disadvantages: Higher conflicts |
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Term
Advantages and Disadvantages of Corporation:
Advantages:
Disadvantages: |
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Definition
Advantages and Disadvantages of Corporation:
Advantages: Legal entity with limited liabilities
Disadvantages: Higher government involvement |
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Term
Advantages and Disadvantages of Franchise:
Advantages:
Disadvantages: |
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Definition
Advantages and Disadvantages of Franchise:
Advantages: No skills or business knowledge needed
Disadvantages: Franchise fee |
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Term
| what does a Balance Sheet include? |
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Definition
| Includes current assets ( cash current inventory, prepaid expenses), total current assets (fixtures, furniture), liabilities, and long term liabilities |
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Term
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Definition
indicator of sales, profit, expenses,
basically profit and loss statement |
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Term
| Retained Earning Statement |
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Definition
| includes net income and dividends which will reduce retained earnings |
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Term
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Definition
| Net worth = assets - liabilities |
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Term
| Total Current Assets calculation |
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Definition
| total current assets = cash + accounts receivable + inventory + prepaid expenses |
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Term
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Definition
| Total assets = total current assets + fixed assets |
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Term
| Total liabilities calculation |
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Definition
| Current liabilities + long term liabilities |
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Term
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Definition
Full study of pharmacy staffing needs, scope of each job, hierarchy
Will alert pharmacy owner of duplicate functions in pharmacy |
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Term
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Definition
| 5 basic needs: physiological needs, safety & security, social needs, esteem needs, self actualization needs |
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Term
| ABC Analysis (Pareto's Law) |
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Definition
Category A - 20% of stock represents 80% of inventory cost
Category B - 15% of products represent 15% of inventory cost
Category C - 65% of products stocked represent 5 % of inventory cost |
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Term
| Maximum Allowable Cost - MAC |
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Definition
| Max amount insurance will pay |
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Term
| Estimated Acquisition Cost - EAC |
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Definition
| Estimated cost to pharmacy for drug by insurance |
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Term
| Actual Acquisition cost - AAC |
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Definition
| Actual cost to pharmacy for a product after discounts etc. |
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Term
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Definition
| Plan in which a patient pays a specific perfect of all loss incurred |
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Term
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Definition
| Fixed amount payment for every service |
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Term
net profit:net sales
normal ratio? |
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Definition
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Term
Net profit:total assets
Normal ratio ? |
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Definition
Net profit:total assets
Normal ratio 10-15% |
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Term
Net profit:inventory
Normal ratio ? |
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Definition
Net profit:inventory
Normal ratio $0.21 to $0.27 |
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Term
Net profit:Net worth
Normal ratio ? |
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Definition
Net profit:Net worth
Normal ratio 20-25 %, 15% acceptable for older pharmacies, 40% is attainable for newer pharmacies |
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Term
Inventory turnover rate calculation
Acceptable rate? |
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Definition
Cost of goods/Average of beginning and ending inventory
Minimum of 4, 6 is target |
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Term
Net sales:Net working capital
Average ratio?
below or above ratio, what does it mean? |
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Definition
Net sales:Net working capital
Average ratio: 4-8
below 4 means under trading or too much capital, over 8 means inadequate capitalization or over trading |
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Term
Net sales: Net inventory
Ratio? |
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Definition
Net sales: Net inventory
Ratio 6-9 |
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Term
Account receivable collection time calculation
what is reasonable (days)? |
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Definition
Year end account receivable/mean credit sales per day
30 |
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Term
| Account payable remittance time calculation |
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Definition
Account payable remittance time calculation
Year end account payable/mean credit purchase per day |
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Term
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Definition
| Ability to meet current liabilities with little or no interruption in regular business |
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Term
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Definition
| Solvency is ability to meet current liabilities with moderate change in the composition of current assets |
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Term
Inventory: Net working capital
What is it a measure of ?
What ratio is a reasonable target? |
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Definition
Inventory: Net working capital
What is it a measure of - liquidity and solvency
What ratio is a reasonable target - 80% |
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Term
Total liabilities:Net worth
Indicator of ?
acceptable ratio? |
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Definition
Total liabilities:Net worth
Indicator of financial position
acceptable ratio below 50% |
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Term
Founded debt:Net Working capital
What is considered a long term liability?
Acceptable ratio? |
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Definition
Founded debt:Net Working capital
What is considered a long term liability - to pay long than 1 year
Acceptable ratio 20-25 |
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Term
Fixed Assets:Net worth
Identifies?
Acceptable ratio? |
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Definition
Fixed Assets:Net worth
Identifies - investment in fixed assets
Acceptable ratio - 20% or less |
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Term
Current Ratio calculation
target ratio? |
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Definition
Current Ratio = Current assets:current liabilities
target ratio 2:1 |
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Term
Quick Ratio (Acid test) calculation
target ratio? |
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Definition
Quick Ratio calculation = (cash + receivables)/current liabilities
target ratio 1:1
Inventory excluded because it may not be converted to cash in 90 days |
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Term
| Working capital calculation |
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Definition
| Working capital = current assets - current liabilities |
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Term
| Profit Margin on sales calculation |
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Definition
| profit margin = net income/net sales |
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Term
| Return on investment calculation |
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Definition
| Return on investment = net profit/net worth |
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Term
| Return on assets calculation |
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Definition
| Return on assets = net profit/average total assets |
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Term
| Debt/Equity calculation and what it means |
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Definition
Debt to equity ratio = total liabilities/owners equity (net worth)
(<50%) |
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Term
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Definition
| Net profit = total income - total costs |
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Term
| Gross Margin % calculation |
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Definition
| Gross margin % = 100 x (Sales - Cost of goods sold)/sales |
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Term
Indicator of financial position ?
What is this dependent on?
For a pharmacy less than 5 years old the ratio should be no higher than what?
For a pharmacy older than 5 years the ratio should be not higher than what? |
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Definition
Total liabilities/Net worth
What is this dependent on - AGE of pharmacy
For a pharmacy less than 5 years old the ratio should be no higher than what - 100%
For a pharmacy older than 5 years the ratio should be not higher than what - 50% |
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Term
| Dispensing fee vs per diem method |
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Definition
Dispensing fee = CD + fee
Per diem method = CD + CD x mark up % |
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Term
| 4 P's of pharmacy marketing |
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Definition
| Price, Placement, product, promotion |
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Term
SPO (Structure-Process-Outcome) compenent
Define what is included in S,P & O |
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Definition
S - Facilities, equipment, staffing,
P - Provider, healthcare system
O - Mortality, morbidity, consumer satisfaction |
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