Management Finance Ratios

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12 Terms

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gross margin percentage

measures profitability before operating expenses are paid

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net profit percentage

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

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net profit percentage goal

2-4%

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return on equity

examines how effectively funds invested by owners are being used

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return on equity goal

10-15%

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current ratio

ability to convert all current assets into cash to pay liabilities

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current ratio goal

2.0 - 5.0

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quick ratio

ability to turn assets into cash quickly

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quick ratio goal

1.0 - 2.0

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debt to equity ratio

measures ratio of sources of funds used by organization

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inventory turnover

measures how effectively a pharmacy utilizes its largest asset

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inventory turnover goal

5-10 turns per year