Management Finance Ratios

gross margin percentage

measures profitability before operating expenses are paid

net profit percentage

measures profitability of a pharmacy after drug costs and operating expenses are paid

net profit percentage goal

2-4%

return on equity

examines how effectively funds invested by owners are being used

return on equity goal

10-15%

current ratio

ability to convert all current assets into cash to pay liabilities

current ratio goal

2.0 - 5.0

quick ratio

ability to turn assets into cash quickly

quick ratio goal

1.0 - 2.0

debt to equity ratio

measures ratio of sources of funds used by organization

inventory turnover

measures how effectively a pharmacy utilizes its largest asset

inventory turnover goal

5-10 turns per year