Term
|
Definition
| It's a dynamic, active process used to track the flow of money b/t financing and investing. |
|
|
Term
|
Definition
Most businesses records their financial statements over 1 year. The fiscal year doesn't have to begin in January. For example, day 1 can begin on May 14th and go 365 days. |
|
|
Term
| What are the 4 important types of financial statements? |
|
Definition
1) Income statements 2) retained earnings statement 3) balance sheet 4) cash flow statement |
|
|
Term
| Income statements are also known as . What is an income statement? How is it different than a balance sheet? |
|
Definition
profit-n-loss or PNL An income statement reveals profitability by combining all revenues over a period of time (usually a fiscal yr). A balance sheet is different, b/c it shows a company's profitability at any single moment. A balance sheet is a statement of financial position. |
|
|
Term
| What are assets? Give examples |
|
Definition
| Assets are what a business owns and uses to produce revenue. Examples would be equipment, supplies (paper, staples), or inventory (drugs). |
|
|
Term
What are equities? What are the two types of equities? |
|
Definition
Equities are the source of assets. The two types of equities are liabilities and owner's equity. |
|
|
Term
What is the basic accounting equation? What are liabilities? What are the other 2 names that owner's equities are sometimes referred to as? What are owner's equities? |
|
Definition
Assets = liabilities + owner's equities Liabilities = assets - owner's equities. Liabilities are debts a company owes on its assets. Owner's equities = assets - liabilities. Other names for owner's equities are stockholder's equity or net worth. Owner's equity are claims that a company has on their assets. |
|
|
Term
On what financial statement would you find solvency goals? What is solvency? |
|
Definition
Solvency goals would be found on a balance sheet. Solvency is the ability to pay debts in the long-term |
|
|
Term
On what financial statement would you find current assets? Define current assets |
|
Definition
Current assets would be found on a balance sheet. Current assets are called "current", b/c they can be converted to cash easily |
|
|
Term
On what financial statement would you find long-term assets? What is another name for long-term assets? What are long-term assets? Give examples. |
|
Definition
Long-term assets (aka Non-current assets) would be found on a balance sheet. Long-term assets are not often turned into cash. Examples are buildings and equipment - things that are used in daily operations. |
|
|
Term
| On what financial statement would you find current and long-term liabilities? What is the difference b/t current liabilities and long-term liabilities? Give examples for both. What is another name for long-term liabilities? |
|
Definition
| Current and long-term liabilities would be found on a balance sheet. Current liabilities are debts that have to be paid within a year. Long term abilities are claims on assets that are not due w/in a year. Examples of current liabilities are accounts payable to wholesalers or employee's salaries. An example of a long-term liability is a mortgage loan. Another name for long-term liabilities is non-current liabilities. |
|
|
Term
On what financial statement would you find net worth? Net worth is also known as . Define net worth. |
|
Definition
Net worth would be found on a balance sheet. It is aka Shareholder's equity. It is what belongs to the owner after all the liabilities have been covered. Sometimes, the profits are divided among shareholders; other times, the profits are reinvested into the business. If the latter occurs, the profits are called retained earnings. |
|
|
Term
On what financial statement would profitability be found on? What is profitability? |
|
Definition
Profitability would be found on the income statement. Dr Palmer's definition: the ability to produce sufficient sales to cover expenses. Definition from investorwords.com: the ability to earn a profit. |
|
|
Term
| On what financial statement would revenue be found on? Define revenue. Give examples. |
|
Definition
| Revenue would be found on an income statement. Revenue is total sales. Examples include Rx sales, non-Rx sales, MTMs. |
|
|
Term
On what financial statement would you find cost of goods sold? Define cost of goods sold. Give examples. |
|
Definition
COGS would be found on an income statement. COGS are what it costs the pharmacy to sell goods to the customer. Examples include ingredient costs (drugs) and overhead (cost of employees, space, etc) |
|
|
Term
| On what financial statement would you find Gross Margin? Define Gross Margin. What is the equation? |
|
Definition
GM would be found on an income statement. The GM is the money that remains after the COGS have been covered. The GM is typically used to pay other expenses or be reinvested. GM = total sales - COGS |
|
|
Term
| On what financial statement would you find operating expenses? Define operating expenses. |
|
Definition
| Operating expenses would be found on an income statement. They are the expenses necessary to conduct pharmacy practice. |
|
|
Term
On what income statment would you find net profit? What is another name for net profit? What is net profit? What is the equation? |
|
Definition
Net profit would be found on an income statement. Net profit (aka net income) shows the company's earnings after all expenses have been paid. Net profit before and after taxes = total revenue - total expense |
|
|
Term
What would be found on a retained earnings statement? What would be found on a cash flow statement? |
|
Definition
Retained earnings, net income, & dividends. Inflows and outflows of cash. |
|
|
Term
What type of ratio is Debt-to-total-assets (profitability, liquidity, solvency, turnover)? Who is the current ratio of interest to? What is the formula for net profit ratio? |
|
Definition
solvency ratio lenders net income (AT) X 100% sales |
|
|
Term
What type of ratio is Gross Margin Ratio (profitability, liquidity, solvency, turnover)? Which ratio usually ranges from 2 - 4 %? is an asset turnover over. |
|
Definition
Profitability ratio Net profit ratio Inventory turnover |
|
|
Term
What is the formula for the gross margin ratio? What type of ratio of the current ratio (profitability, liquidity, solvency, or turnover) ? Which ratio is of interest to lenders and stockholders? |
|
Definition
Sales - COGS X 100% sales (You want the highest GM% as possible) Liquidity ratio Debt-to-total-assets ratio |
|
|
Term
What is the formula for current ratio? Who is inventory of interest to? Pharmacies desire minimum inventory turnover rates b/t and a year. |
|
Definition
Current ratio = Current assets Current liabilities Pharmacy managers 5 - 10 |
|
|
Term
Which is the only ratio that gets its #s from both the income statement and balance sheet? What is the formula? What does the GM ratio indicate? |
|
Definition
Inventory turnover ratio Cost of Goods Sold Average Inventory efficient purchasing |
|
|
Term
What type of ratio is net profit ratio (profitability, liquidity, solvency, or turnover)? What is the formula for debts-to-total assets ratio? What is the debt-to-total asset ratio for established pharmacies? |
|
Definition
Profitability ratio Total debt X 100% Total Assets 40% |
|
|
Term
| Net profit ratio shows a relationship b/t and . |
|
Definition
|
|
