FORMULA

🌷 PHRM 351 — Finance & Business Formula Cheat Sheet (Juliet-Coded Edition)

💵 1⃣ Core Terms

Term	Meaning
Revenue (aka Sales)	Total earned from selling goods/services
COGS = Cost of Goods Sold	Direct cost to make or buy what you sell (e.g., drug acquisition + packaging)
Expenses / Operating Costs	Overhead like rent, salaries, utilities
Fixed Cost	Doesn’t change with sales (e.g., rent, insurance)
Variable Cost	Changes with volume (e.g., drug inventory, vials)

🧾 2⃣ Profit & Margin Math

Formula	Description	Example
Gross Profit = Revenue – COGS	Profit before operating expenses	80 – 50 = 30
Gross Margin % = (Gross Profit ÷ Revenue) × 100	% of sales kept after paying COGS	(30/80)×100 = 37.5 %
Operating Profit (EBIT) = Gross Profit – Operating Expenses	Earnings before interest & tax	30 – 10 = 20
Net Profit = Operating Profit – Interest – Taxes	“Bottom line” take-home profit	20 – 3 – 2 = 15
Net Margin % = (Net Profit ÷ Revenue) × 100	Overall profitability	(15/80)×100 = 18.8 %

📊 3⃣ Return & Performance

Formula	Purpose	Example
ROI % = (Net Profit ÷ Investment) × 100	Return on investment	(15 / 300)×100 = 5 %
ROE % = (Net Income ÷ Owner Equity) × 100	Return on owner’s equity	(60 / 400)×100 = 15 %
DSCR = Net Income ÷ Annual Debt Service	Lender test for loan capacity	125 000 / 100 000 = 1.25 ✅

☕ 4⃣ Break-Even & Sales Math

Break-Even Units=Fixed CostsPrice per Unit – Variable Cost per Unit\text{Break-Even Units} = \frac{\text{Fixed Costs}}{\text{Price per Unit – Variable Cost per Unit}}Break-Even Units=Price per Unit – Variable Cost per UnitFixed Costs

🩵 Example: 10 000 ÷ (40 – 30) = 1 000 units

Break-Even Revenue=Break-Even Units×Price per Unit\text{Break-Even Revenue} = \text{Break-Even Units} × \text{Price per Unit}Break-Even Revenue=Break-Even Units×Price per Unit

Margin of Safety % = (Actual Sales – Break-Even Sales) ÷ Actual Sales × 100

💰 5⃣ Cash Flow Essentials

Type	In/Out Examples	Formula
Operating	Rx sales (+), payroll (–)
Investing	Buy fridge (–), sell property (+)
Financing	Bank loan (+), loan repay (–), dividends (–)

Net Cash Flow=Operating+Investing+Financing\text{Net Cash Flow} = \text{Operating} + \text{Investing} + \text{Financing}Net Cash Flow=Operating+Investing+Financing

🧠 Profit ≠ Cash Flow: buying stock → uses cash now but affects profit later.

📈 6⃣ Growth & Compounding

A=P(1+r)tA = P(1 + r)^tA=P(1+r)t

where A = final amount, P = principal, r = rate (decimal), t = years
💡 10 000(1.06)^5 = 13 382

🧮 7⃣ Depreciation (Equipment Value Drop)

Straight-Line Depreciation=Cost – Salvage ValueUseful Life (years)\text{Straight-Line Depreciation} = \frac{\text{Cost – Salvage Value}}{\text{Useful Life (years)}}Straight-Line Depreciation=Useful Life (years)Cost – Salvage Value

Example: (10 000 – 1 000)/5 = 1 800 per year.

🏦 8⃣ Pharmacy Ownership & Valuation (Lec 14 Extras)

Formula	Description	Example
Pharmacy Value ≈ Net Profit × Multiplier	Quick valuation rule of thumb	250 000 × 5 = 1.25 M
Loan Payment (Amortized)	P×r(1+r)n(1+r)n–1P × \frac{r(1 + r)^n}{(1 + r)^n – 1}P×(1+r)n–1r(1+r)n	Use if asked for monthly payments
Inventory Turnover = COGS ÷ Avg Inventory	Efficiency metric	500 000 ÷ 100 000 = 5×/yr
Days in Inventory = 365 ÷ Turnover	Holding time	365 / 5 = 73 days

🇨🇦 9⃣ Taxes & Savings (Quick Recall)

Account	Tax Treatment	Best Use
RRSP	Tax-deductible now, taxed later	High-income years → refund
TFSA	After-tax in, tax-free out	Flexible savings
FHSA	Combines both benefits	First home fund
Corp Tax Rate (BC)	Small biz = 11 %; General = 27 %
LCGE	1 M capital-gain exemption on small biz sale

🌈 10⃣ Mini Example (Everything in One)

Given: Price $60, COGS $35, Fixed Cost $100 000, Interest+Tax $20 000, Sales 5 000 Rx.
→ Gross Profit = (60–35)×5 000 = 125 000
→ Operating Profit = 125 000–100 000 = 25 000
→ Net Profit = 25 000–20 000 = 5 000
→ ROI % = 5 000 ÷ 100 000 × 100 = 5 %
→ Break-Even Units = 100 000 ÷ (60–35) = 4 000 units

✅ Sell > 4 000 Rx to profit.

💡 11⃣ Quick Memory Triggers

“Gross” = Before Expenses 💰
“Operating” = Core Business 🧠
“Net” = After Everything 💵
“COGS” = What it costs to get on the shelf 📦
“Break-even” = Safety line ⚖
“ROI” = Worth it or nah 📊