CVPM Preparation Workbook (Equations And Formulas) Flashcards
What is the Accounting Equation?
Assets = liabilities + equity
How do you calculate Accounts Receivable turnover? (A/R turnover)
*Net Credit Sales ÷ Average A/R
(Accounts receivable (AR) turnover is a ratio that measures how many times a business converts its accounts receivable into cash during a specific period, often calculated quarterly or annually.1 The higher the AR turnover ratio, the better, as it indicates a more efficient collection process and better cash flow.)
How do you calculate annual revenue per veterinarian?
Divide annual gross revenue by the number of full-time equivalent veterinarians (gross revenue ÷ # of FTE DVMS)
How do you calculate the average age of A/R?
365 ÷ AR turnover
(The average age of accounts receivable (AR) is how long, on average, a client’s debt remains unpaid. To calculate the average age of AR, divide the number of days in the period being analyzed by the accounts receivable turnover ratio. For example, if analyzing AR for the entire year, use 365 for the numerator, but for a quarter, use 90.)
How do you calculate the average age of inventory?
Divide 365 days (year) by inventory turnover ratio
How do you calculate the average transaction value (ATV)?
Divide total revenue by total number of transactions
How do you calculate the cash flow? (Current ratio)?
Current assets ÷ current liabilities
How do you calculate Economic Order Quantity? (EOQ)?
√(2AF/(HxUC))
Square root of 2 x A x F ÷ H x UC (A = annual demand in units, F = fixed ordering costs incurred per order, H = holding costs expressed on annual basis as percentage of unit cost, UC = unit cost of purchasing the item from the vendor)
How do you calculate the efficiency ratio?
of patient visits ÷ # staff hours
How do you calculate Employee Retention?
(# of positions retained ÷ # of positions in the organization) x 100
How do you calculate Equity Ratio?
*Total Equity ÷ Total Assets
(The equity ratio is calculated by dividing a business’s total Equity by its total assets)
How do you calculate Gross Profit?
Revenue - Cost of Goods Sold = Gross Profit
How do you calculate inventory turnover rate (ITR)?
Total # of units purchased in the period divided average inventory for that period.
(AVG INVENTORY = beginning inventory + ending inventory) / 2
Ex: You purchased 35 tubes of in a year . You had 1 in January and 4 animax in December. AVG Inventory= (4 + 1) / 2 = 2.5
ITR = 35 / 2.5 = 14
This means Animax turned over 14 times during the year.
How do you calculate Net Income (before taxes)?
Gross Profit - Operating Expenses = Net Income (before taxes)
How do you calculate Net Income (or loss)?
Gross Income - Expenses
