Question | Answer |
assets | properties, furnishings, inventory, supplies, and equipment owned by the pharmacy; may be put into two categories: current, or short-term, assets and long-term assets |
average wholesale price (AWP) | an average price at which drugs are purchased at the wholesale level, or the average value at which wholesalers sell a particular drug to pharmacies |
base profit | the amount of profit determined by subtracting the total pharmacy overhead amount from the pharmacy’s income |
capitation fee | a monthly fee paid by some insurance plans to a pharmacy under a specific prescription reimbursement plan |
current percentage of profit | the amount of profit that is determined by dividing the base profit by income and then multiplying that quotient by 100; often used to determine the desired percentage of profit |
depreciation | an allowance made to account for the decreasing value of a fixed asset; properties, furnishings, and equipment owned by the pharmacy are called fixed assets, or simply assets |
desired percentage of profit | the percentage of profit the pharmacy intends to make on the product after the overall cost is subtracted from the selling price |
discount | a price that is reduced from what is typically charged |
discount rate | the percent that the discounted price is reduced from the regular selling price |
dispensing fee | the amount that is charged over and above the pharmacy’s purchase price for a medication; this amount is meant to cover all costs related to filling a prescription, beyond the purchase price of the drug |
disposal value | the value of an item should it be sold or disposed of at the end of its useful life |
flat rate | a low pharmacy selling price for a certain amount of medication, a supply designed to last a specific number of days |
gross profit | the difference between the pharmacy’s selling price and purchase price |
income | the money or equivalent received from the sale of medications, supply items, or equipment |
inventory | a listing of all of the items that are available for sale in a business |
inventory value | the total value of all of the drugs and merchandise in stock on a given day |
markup rate | a percentage amount that is determined by subtracting the pharmacy’s purchase price for an item from the pharmacy’s selling price for that item |
net profit | the difference between the selling price and the overall cost |
overall cost | the sum of the cost to purchase the drug from the manufacturer (known as the pharmacy’s purchase price) and the cost to dispense the drug |
overhead | the pharmacy’s cost of doing business; this cost includes personnel salaries, equipment, and operating expenses such as rent, taxes, and utilities |
par level | an average inventory range for an item, which generally includes the minimum and maximum stock levels for the item |
pharmacy benefits management (PBM) | a large prescription processing service that contracts with insurance companies and pharmacies to process insurance reimbursement |
profit | the financial gain made when the amount earned is greater than the amount spent during a specified period |
profit margin | the difference between the cost of doing business (the pharmacy’s purchase price, overhead, and preparation costs) and the selling price of a drug or product |
purchase price | the cost to purchase the drug from the wholesaler or manufacturer |
selling price | the amount that the pharmacy charges for a particular drug or product; sometimes referred to as accounts receivable |
turnover rate | the number of times the amount of goods in inventory was sold during the year |
wholesaler | a company that sells and distributes a large number of goods such as medications and supply items to a pharmacy; a company that acts as a go-between for pharmacies and manufacturing companies such as drug manufacturers |