Term
|
Definition
| uses income and balance sheet to detect trends and problems |
|
|
Term
| examples of ratio analysis -3 |
|
Definition
iventory/credit management problems
poor pricing policies
declining sales and profits |
|
|
Term
| what is used to see if the business can earn adquate profits |
|
Definition
|
|
Term
| what determines if the business funds and management are being used wisely |
|
Definition
| test of overall performance |
|
|
Term
| 5 questions asked by ratio anaylsis |
|
Definition
adequate profits?
fund and managemnt?
short term debt payment?
long term debt payment?
management of assets? |
|
|
Term
| what is sued to see if the business can pay its short term debts on time |
|
Definition
|
|
Term
| what shows if the firm can pay long term debts? |
|
Definition
|
|
Term
| what determines the efficiency of managing the firm's assets |
|
Definition
|
|
Term
| to efficiently run the pharmacy, do you want to have more or less assets |
|
Definition
| less- get more sales and income |
|
|
Term
what are the tests of profitability-2
which one measures the profits BEFORE expenses considered? |
|
Definition
gross margin
net income;
gross margin |
|
|
Term
who can change the GM%
-how? -2 |
|
Definition
pharmacy managers
charge higher prices
buy merchandise at a lesser cost |
|
|
Term
| low gross margin can be from? -3 |
|
Definition
theft
not ringing up sales
low prices/ bad purchasing |
|
|
Term
| in today's care market what is the GM% range |
|
Definition
|
|
Term
| when are GM% and NI% more valuable- 2 |
|
Definition
compare time periods
compare to other pharmacies |
|
|
Term
| how can you increase NI%? -2 |
|
Definition
increase gross margin
decrease expenses |
|
|
Term
Averasge Net income % is _
the range is _ - _ |
|
Definition
|
|
Term
| what are the tests of overall performance- 2 |
|
Definition
return on equity
return on assets |
|
|
Term
| what test is also called return on investment/net worth |
|
Definition
|
|
Term
| what test is more imoprtant to shareholders (or owners) to show that the risk is worth the profit |
|
Definition
|
|
Term
| what makes the ROE and ROA more valuable as a tool-2 |
|
Definition
compare time periods
compare other investment opportunites |
|
|
Term
| how can you increase ROE-3 |
|
Definition
increase revenue
decrease expenses
decrease owner's equity |
|
|
Term
| what what the two ways to decrease owner's equity |
|
Definition
financial leverage
decrease assets |
|
|
Term
what is financial leverage
why is it risky |
|
Definition
owner borrows more funds and withdraws a comparable amount,
risky bc have to repay loans |
|
|
Term
| what is most reasonable way to increase ROE (thru decreasing owner;s equity-2 |
|
Definition
hold less inventory
hold less accounts recievable |
|
|
Term
| what is a realstic ROE to be seen for a pahrmacy? |
|
Definition
|
|
Term
| Return on assets mesaures what |
|
Definition
| how the fund availabl to the manager are being used |
|
|
Term
| what effect does increased borrowing have on ROA? |
|
Definition
|
|
Term
| what is the best way to improve ROA? |
|
Definition
| proper management of account recievable and inventory |
|
|
Term
| what should ROA not be lower than? |
|
Definition
|
|
Term
| what are the tests for Luiquidity-3 |
|
Definition
current ratio
quick ratio
accounts payable period |
|
|
Term
|
Definition
compares current assets to current debt
(current assets are what pay for this debt) |
|
|
Term
do you wnat a high or low current ratio?
what is the range you want? |
|
Definition
high, but not too high
2-3.8 |
|
|
Term
| which test should whether you can pay debts if not able to sell inventory |
|
Definition
|
|
Term
| what does quick ratio measure |
|
Definition
| very liquid current assets (cash, act. recievable) to current liabilities |
|
|
Term
what is the deisred quick ratio range?
why cna pharamcies have this lower ratio? |
|
Definition
1.1-2
their invenotry sells quikcly unlike large ticket items |
|
|
Term
whcih test shows how long it takes for the pharamcy to pay for its credit purchases?
how is this measured |
|
Definition
accounts payable period;
avg days btwn purchase and payment |
|
|
Term
less than _ days for account payable period means cash discount
>_ dyas means operating on borrowed capital
what is the pahramcy average? |
|
Definition
|
|
Term
| what type of ratios measures the ability to pay long term debts |
|
Definition
|
|
Term
| what is the good thing about using debts in business |
|
Definition
| they give the lender no ownership (unlike investors) |
|
|
Term
| what are the debt to equity ratios-4 |
|
Definition
current liabilites to OE
long term det to OE
total debt to OE
financial leverage |
|
|
Term
| do you want high or low debt to equity ratios |
|
Definition
|
|
Term
| for solvency tests, if above _% then it is undercapitlazied |
|
Definition
|
|
Term
| for solvency tests, above _% is underdesireable |
|
Definition
|
|
Term
what is the desired ratio for solvency tests?
what is the deisred range for total debt |
|
Definition
|
|
Term
| efficiency involves generating a certain activity with small/large investment of assets |
|
Definition
|
|
Term
|
Definition
account recievable collection period
invenotry turnover
asset turnover |
|
|
Term
| 2 tests of efficeincy for the hospital |
|
Definition
hospital invenotry turnover
personal expense per occupied bed |
|
|
Term
| account recievable collection period should be no greater than _ times the credit terms |
|
Definition
|
|
Term
| anything above _ is considered bad credit management for ARCP |
|
Definition
|
|
Term
| if you minimize inventory- what otherr two things maximize |
|
Definition
|
|
Term
| if inventory rate is too high what happens- |
|
Definition
| find yourslef out of stock |
|
|
Term
| how can you increase inventory turnover |
|
Definition
increase sales w/o incr inventory
decrease invenotriy and maintain same volume of sale |
|
|
Term
| how do you calculate average inventotry at Cost (for ITO) |
|
Definition
|
|
Term
| do you want a high of low ITO |
|
Definition
|
|
Term
| High Aset turnover will increase what other two things |
|
Definition
|
|
Term
| do you want a high or low ATO |
|
Definition
|
|
Term
| what 2 general types of test do hospital pharmacies do? |
|
Definition
|
|
Term
| what are a hospitals 2 largest expense items |
|
Definition
|
|
Term
| what is the average inventory turnover for a hospital |
|
Definition
|
|
Term
| how do calculate occupied beds |
|
Definition
| number of beds x rate of occupancy |
|
|
Term
| what is the average PEPOB (personal per occupied bed) |
|
Definition
|
|
