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19 FALL- Financial Management > Test 2 > Flashcards

Test 2 Flashcards

1
Q

Community services

A

MTM, chronic condition management, med rec, med adherence

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2
Q

Hospital services

A

ICU, UED, ID, nutritional support, polypharmacy

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3
Q

Long term care services

A

Drug regimen review, preventative care, immunizations, fall risk

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4
Q

Managed care services

A

Anticoagulant, MTM, chronic condition management

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5
Q

Needs assessment

A

Collection of data to assess the need for a particular service or product within a defined population - to determine if a market exists for a service

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6
Q

Approaching steps to need assessments

A

What does the pt need or problem that needs to be addressed? How large is the problem?
What are the trends?
How well are the patients that need to be addressed?

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7
Q

Primary research

A

Survey, interviews, pt records, more insight with location

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8
Q

Secondary research

A

Research conducted for another purpose and publicly available and easier to obtain, stated, literature review

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9
Q

identify pt care services

A

Use primary and secondary research - needs assessment

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10
Q

Justify pt care services

A

Financial, swot, gaining preliminary approval

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11
Q

Plan pt care services

A

Service planning, payment

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12
Q

SWOT ananlysis

A

Strength, weakness, opportunity, threat

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13
Q

Key components of pt care service plan

A

Clear service plan, mission and vision statement, defined well goals, organization structure (program/reporting), policies and procedure, staffing, documentation, program evaluation

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14
Q

Collaborative practice agreement

A

Written between prescriber that says can do things under their authority

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15
Q

Service driven models

A

Medicare part B
AMA billing codes for pharmacists
Private insurance

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16
Q

Patient centered medical home

A

Idk

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17
Q

Accountable care org

A

Primary care providers
Manage full continuum of care for a defined pt population
Acct for overall costs and quality
Referred to as the medical neighborhood

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18
Q

Clinical pharmacy services

A

Evidence from the literature supports supports the value of clinical pharmacy services. Development of such services may depend on institutions pharmacy practice model

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19
Q

Hiring

A

Managers should take a strategic approach to recruitment and hiring. Determine if hiring team/ search committee should be used. Develop good job description. Develop screening and evaluation process. Make job offer to desirable candidate.

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20
Q

Retention

A

Engage in value proposition:

  • affiliation
  • work content
  • career
  • benefits
  • compensation
  • factors that motivate employees shouldn’t be in rewards and opportunities
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21
Q

Comprehensive model

A

Generalist/specialist : mixed of clinical and distribution activities - require high degree of organization independency

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22
Q

Patient centered/ decentral model

A

Clinical pharmacist and staff pharmacist - good for promotion of complete care - less attractive to specialized care pharmacists

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23
Q

Budgeting - planning

A

The budgeting process helps identify areas where operations can be improved by eliminating inefficiencies
Ex: not receiving profit from OTC

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24
Q

Budgeting- directing

A

Budgeting aids in coordinating managements decisions and actions to achieve the companies budgeted goals
EX: make a decision to make more of a profit

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25
Q

Budgeting- controlling

A

Involves the process comparing actual performance against the budgeted goals
Ex: reaches budget after putting it into place - make sure budget meets goal

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26
Q

Budgeting

A

Used in managing the operations of many pharmacy organizations - establishes specific goals, executing plans to achieve those goals, periodically comparing actual results with the goals - budget translates they pharmacy’s objectives and functional plans into monetary terms

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27
Q

List the 5 types of budgeting

A
  1. Operating budget
  2. Sales budget
  3. Operating expense budget
  4. Cash budget
  5. Capital budget

Size and goal of the organization will determine which budget

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28
Q

Operating budget

A

Shows the pharmacy’s anticipated revenues and expenses for the coming 6 to 12 months - used for short term planning and financial control - master budget - based upon assumptions - expected sales and expenses - like income statement

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29
Q

Community pharmacy operating budget

A

Sales of goods

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30
Q

Hospital pharmacy operating budget

A

More personal, supplies, more detailed

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31
Q

Sales budget

A

Number of prescriptions expected to be dispensed for the budget period - expected prescriptions count x average prescription price (historical price)

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32
Q

Operating expense budget

A

Payroll, rent, supplies, advertising, and taxes

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33
Q

Controllable costs

A

Marketing budgets and labor costs

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34
Q

Non-controllable costs

A

Rent and insurance, out of control of the manager

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35
Q

Cash budget

A

Anticipating cash flows from 9-12 months - derived from operating budget - needed to know for inventory purchases and other operating expenses, upper level management

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36
Q

Capital budget

A

Pharmacies planned investment in fixed assets. Common in large orgs. Ex: installation of computer system, purchase of robotic system, major renovation of the pharmacy itself

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37
Q

Proper budgeting depends on two processes

A
  1. Demand forecasting

2. Planning

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38
Q

Forecasting for existing pharmacy

A

Demand forecasts based on the trend of demand over the past several years. This assumption is often untrue in pharmacy due to changes in competition, regulation, economic conditions, new gov’t regulations. Must be supplemented with manager judgement - like sale % increase prediction

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39
Q

External factors - forecasting for an existing pharmacy

A

Those over which manager has no control (inflation, new regulations, changes in competition)

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40
Q

Internal factors - forecasting for existing pharmacy

A

Those which manager has some control (promotions, services, availability, marketing)

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41
Q

Three forecasts pharmacy managers develop

A
  1. Optimistic estimates
  2. Pessimistic estimates
  3. What managers believe most likely will occur (normal)
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42
Q

Forecasting for a new pharmacy

A

More difficult, manager develop market potential (total demand in the pharmacies market area of goods and services, developed from census records and trend reports), must try to determine the area demand - depends on marketing and competition

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43
Q

Fixed budget

A

Based on a single level of forecasted demand, the manager develops the best possible forecast demand and base revenue and expense projections on this forecast

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44
Q

Flexible budget

A

Allows budget variables expenses to change in response to changes in demands. Variable expenses- increase or decrease in direct proportion to changes in demand (COGS, prescription labels and vials), preferable for pharmacies that typically experience wide or unexpected variations in demand

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45
Q

Two analyses can be made from the performance report of what budget variances occurred

A
  1. Manager determines which variances are large enough to merit further investigation
  2. For the significant variances, the manager must determine why the variance occurred
46
Q

Pharmacy performance report has 3 columns

A
  1. Actual revenues and expenses
  2. Budgeted revenues and expenses
  3. Difference between actual and budgeted revenues and expenses — budget variance
47
Q

How to find the variance percentage

A

Variance (actual-budget) / budget

48
Q

If revenue or expense > budgeted amount

A

Positive variance

49
Q

Revenue or expense > budgeted amount

A

Negative variance

50
Q

Favorable variance

A

Variance increases net income, such as a positive revenue variance or a negative expense variance (abbreviated F)

51
Q

Unfavorable variance

A

Variance decreases net income, such as a negative revenue variance or positive expense variance

52
Q

Factors that affect variance

A
  1. Volume
  2. Price
  3. Mix effects/mix differences
53
Q

Factors that affect unfavorable salary variance due to

A

Employees working more hours than budgeted (volume), being paid higher than budged salaries (price), using more pharmacists and less technicians (mix)

54
Q

Favorable revenue variance for prescription sales due to:

A

More than budgeted number of prescriptions dispensed (volume), higher budgeted prices (price), dispensing higher than budged number of more expensive products (mix)

55
Q

Balance sheet

A

Statement of financial position, snapshot at a particular time, “date of”, amounts are generally historic costs of items and not current value

56
Q

Assets

A

Economic resources with potential to provide future economic benefits to a firm - cash, accounts receivable, inventories, buildings

57
Q

Liabilities

A

Creditors claim, accounts payable, unearned income, notes payable

58
Q

Shareholders equity

A

Owners funds provided by buying shares or by reinvesting the net assets generated by earnings - common stock, contributed capital, retrained earnings

59
Q

What are 3 things not on a balance sheet

A

Cash paid for rent, COGS, depreciation

60
Q

Income statement

A

Statement of operations, records companies revenues and expenses for a specific period “for the period ended” of a specific date

61
Q

Revenues

A

Measure the inflows of assets from selling goods and providing services to customers

62
Q

Expenses

A

Measure the outflow of assets incurred in generating revenues

63
Q

Net income

A

Amount earned after recording after recording all expenses necessary to generate the sales recorded - when total expenses exceed total revenues, a net loss is incurred

64
Q

COGS

A

Largest expense on income statement, used to find gross profit

65
Q

What needs to be deducted on the income statement to get the net income

A

Interest and expense

66
Q

What is not on the income statement

A

Assets, inventory, common stock

67
Q

What is on the income statment

A

COGS, gross profit, operating expenses (salaries, insurance, rent), operating profit, interests and tax expense

68
Q

Statement of cash flows

A

Reports information about cash receipts (inflows) and cash payments (outflows) during a period “for the date ended”- used as an analytical tool to assess short-term viability of a company

69
Q

Cash flows organized into 3 major categories

A
  1. Cash flows from operating
  2. Cash flow from investing
  3. Cash flows from financing
70
Q

Operating activities- cash flows

A

Revenue-generating activities of a business (fines, sales, commissions, payroll, invoices)

71
Q

Investing activities - cash flows

A

Payment made to acquire a long-term asset as well as cash received from their sale (purchase of fixed as and purchase of ale of securities issued by other entities)

72
Q

Financing activities - cash flows

A

These constitute activities that will alter the equity or borrowings of a business (the sale of company stores, the repurchase of shares, and dividend payments)

73
Q

What are 3 things not on statement of cash flows

A

Income tax expense, sales prescription, net income

74
Q

Statement of shareholder’s equity

A

Displays component shareholder equity, “for the period ended” major transactions recorded on this statement - net income and the payment of dividends, re earnings, common shares

75
Q

Vertical financial analysis

A

Compares single companies over time, relating current result historical performance and future performance

76
Q

Horizontal financial analysis

A

Compares financial results of one company’s ratio to ratios of other similar companies, as well as to standard average industrial ratios and the internal deviation of these ratios

77
Q

What can distort a ratio

A

Seasonal factors - short-term calculations

78
Q

Four types of ratios

A

Profitability, liquidity, solvency, turnover

79
Q

Profitability ratios

A

Gross profit margin, net profit margin, measures overall success of the company

80
Q

Two things that influence gross profit margin

A

Drug prices and reimbursement formulas in third party contracts

81
Q

Net profit margin

A

Determines how well the org manages operating expenses, compares performance of two or more pharmacies

82
Q

Liquidity ratio

A

Current ratio, quick ratio, ability to meet its short-term financial organization

83
Q

Current ratio

A

1.5 to 3 for healthy businesses, values greater than 5 are considered by some to be too high. A low current ratio < 2 indicates that the organization has low current assets (cash) relative to its current liabilities

84
Q

Quick or acid-test ratio

A

Should be between 1.1 to 2. Quick ratio of less than 1.0 means that the cash that the organization on hand would not be sufficient to pay all its current liabilities. Higher than 1.0 means the organization has more quick assets than current liabilities

85
Q

Solvency ratios

A

Debt ratio, debt to equity ratio, interest coverage ratio, satisfy long-term debt obligations and viability of the business to continue future operations

86
Q

Debt ratio

A

Liquidity and reliance on credit

87
Q

Debt to equity ratio

A

Owner’s reliance on credit

88
Q

Interest coverage ratio

A

Ability to pay interest on total outstanding debt

89
Q

Turnover ratio

A

Inventory turnover, receivable turnover, efficiency with which a business uses its assets

90
Q

Inventory turnover

A

Low - 6 or below, org inventory too large for its operations and cash could be better spent elsewhere
High- able to sell and replace inventory with high efficacy and therefore generate higher revues and profits
6- inventory turns over every 2 mon
3- inventory turnover every 3 months
12- turns over 1/ month

91
Q

Accounting

A

Encompasses all of the processes necessary to record, report, and analyze the financial activities of a company

92
Q

Reporting

A

Reporting occurs with the financial statements, which represent the summarized financial activities of a business and conform to standardized formats. By adhering to standard reporting formats

93
Q

External users

A

Investors, creditors, consumer, regulatory agencies, tax authorizes

94
Q

Financial accounting

A

Associated with preparing reports for external users of a business, external, summarized reports quarterly reports, focus on the past, help with investment and credit decisions

95
Q

Managerial accounting

A

Used to guide management in making financing, investing, and operations decisions for the company, internal (companies managers), internal reports, detailed reports on a weekly or daily basis, concern about how reports affect employee behavior, focus on the future

96
Q

Financial statements useful for

A

Business to generate cash, derive financial ratios from the statements that can indicate the condition of the business, investigate the details of certain business transactions

97
Q

Generally Accepted Accounting Principles (GAAP)

A

Relevant, reliable, comparable information

98
Q

Financial accounting standards boards

A

Private group that sets both broad and specific principles for america companies

99
Q

Securities and exchange commission

A

Government group that establishes reporting requirements for companies that issue stock to the public

100
Q

Going concern

A

Any given company plans to remain in existence for the foreseeable future

101
Q

Objectivity

A

Accounting entries will be recorded on the basis of objective evidence

102
Q

Conservatism

A

Accounting estimates, evaluations and opinions should neither overstate nor understate the business activities of the company

103
Q

Conservatism

A

Accounting estimates, evaluations, and opinions should neither overstate nor understand the business activities of the company

104
Q

Consistency

A

Similar measurement concepts and procedures for related items within financial statements are applied for entire accounting period

105
Q

Matching

A

Expenses match with revenues in the same period on income statment

106
Q

Materiality

A

Acknowledge significance of various decisions and their ultimate effects on the financial statements given the magnitude of a company’s operations

107
Q

Sarbanes-oxley

A

Help curb financial abuses at companies that issue their stock to the public. Internal control: procedures and processes used by a company. More transparency.

108
Q

Money measurement concept

A

Stipulates that all business transactions must be expressed in monetary terms

109
Q

Cash basis accounting

A

Recording revenue and expenses in the period they are received or expended in cash. Not considered with GAAP-Does not appropriately reflect matching principle, very small companies

110
Q

Accrual basis accounting

A

Revenue and expenses are recorded n the period in which they are earned incurred regardless of whether cash is received or disbursed - conforms with GAAP

111
Q

current ratio formula

A

current assests / current liabilities
< 2 - low current assets
> 5 company is acting too conservatively

112
Q

quick ratio

A

current assets - inventories - prepaid expenses / current liabilities
want between 1.1 and 2, if too low, org doesnt have enough cash on hand to pay all of current liabilities

19 FALL- Financial Management (3 decks)

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