HCI 2 Exam 3 Business and Finance

Define Finance

analytical process and is focused on a company's financial health

define marketing

creative servies focused on meeting customers needs

Finance is focused on _____ (planning/monitoring) while accounting is _____ (planning/ monitoring)

planning, monitoring

Define accounting

system that provides quantitative information to monitor the flow of financial resources

For accrual cash flow accounting, revenue, expenses, and taxes are looked at ___

at the time of service

cash-basis cash flow accounting is looked at:

once the cash is processed (received of spent)

T/F: Fiscal years for companies are january- december

false; can be any 12 consecutive months

Assests equation

assets = liabilities + owner's equity

Creating a corporate budget and forcasting helps an organization to:

set financial goals

prioritize spending, identify areas of cost savings and investment

T/F: when creating a budget, the organizations mission and vision are not important

False; critical to consider

How many months before fiscal year ends is it ideal for a budget to be approved

2 months

What is an operating plan

used to help managers forecast how much profit/ loss is anticipated and how much money will be available to spend on expenses

T/F: The #1 vairance in operating budget comes from inflation

False; inflation is built in to the budget process

Variances in operating budget come from:

errors in projects

changing business conditions

unmet conditions

T/F: Capital budgets are separate from operating budgeting process

True

T/F: Capital expenditures are outlays that provide benefit for time-period > the year in which they were incurred

True

Capital items _____ (appreciate/ depreciate) over their useful lifetime

depreciate

Are these examples of operating or capital: build new space for clinical service, replace 6 computers, purchasing ADC's, purchasing compounding equipment

capital

Are these examples of operating of capital: leasing ADC's, monthly maintenance fees, monthy compounding supply costs, renting space for clinical services

operating

Positive variance is _____ and negative variance is ______

favorable, unfavorable

Expenses are

upward internal drivers

capital is

downward internal driver

revenue is

downward external driver

volumes are

upward external drivers

Define balance sheet

provides a snapshot of a firm's resources (assets) and how they are financed at any point in time

Balance sheet is qualitative or quantitative?

quantitative

Define income statement

a dynamic document that tells you about money coming in and money necessary to maintain that income

Net income, net profit, or earnings =

income - expenses

Statements of cash flow determine the cash flow _____ over FY and last line indicates amount of cash available at the end

efficiency

Gross profit equation

sales - COGS

GPM (gross profit margin) equation

(sales-COGS)/total sales

NPM (net profit margin) equation

net income after taxes/ total sales

ROA (return on assets equation)

net income / average total sales

ROI (return on equity/ investment) equation

net income/ average owner's equity

CR current ratio equation

current assets / current liabilities

QR quick ratio equation

(current assets - inventory - prepaid expenses) / current liabilities

Inventory Turnover Ratio equation

COGS / average inventory (at cost)

DIOH (days inventory on hand) equation

365 / ITR

ACP (average collection period) equation

365 / RTR

RTR (receivables turnover ratio)

credit sales / average AR

RTR (reveivables turnover ratio

credit sales / average accounts receivable

T/F : COGS does not apply to "service-based" activities

true

T/F: GMP is the % of every dollar that covers fixed costs, operating costs, interest and taxes

true

Net profit margin is the fraction of:

net profit generated for every $1 in sales

Return on equity looks at the ability to

generate profits from funcs provided by owners/ investors

Which ratio is also called the acid test and only looks at "quick assets," which are easily converted to cash?

quick ratio

Would a pharmacy rather an ITR of 10-12 or less than 6?

10-12

T/F: carrying a high drug inventory for long periods is OPTIMAL

False; BAD, inefficient and indicates poor/ inefficient asset utilization

RTR measures:

how quickly receivables are turned into cash

____ or ____ show detailed explanation of reimbursement from third party

EOB or PRR

How can an institutional pharmacy lead to potential profit for a hospital despite being a cost center?

contributes to overal reduction in total cost of care/ admission and chifts services from acute care to ambulatory

Biggest difference between marketing and selling

marketing is thinking about terms of customer needs and satisfaction

selling focuses on gettingpeople to exhange cash for products

4 P's of marketing Mix

product

price

place

promotion

Most important P

products

The most misunderstood P

price: involves more than $ amount customer has to spend. includes time, effort, inconvenience, embarrassment

Cost-based pricing is appropriate when:

there is little or no competition,

competitor prices for competing products are similar

Demand-based pricing is more appropriate when:

trying to PENETRATE markets

trying to establish market leadership

Secondary market research =

uses data gathered and used for some other purpose and analyze that data to answer a new question

Primary market research =

uses data gathered from original sources with studies specifically designed to answer specific marketing questions

Macroenvironmental factors are ____ and micro are _____

external, internal

What is social marketing

the marketer facilitates an exchange in which patient receives a perceived benefit that outweighs the perceived benefit of the clinically undesirable behavior