Question

1) Envision a time in your future career as a pharmacist that you will need to develop a business plan for some business endeavor. In one to two short paragraphs, describe the purpose of your business plan, why it is necessary, and also what benefits you hope to see as a result of writing this plan.

2) If, as a manager, you could only pick one financial ratio to look at on a weekly/monthly basis, which would it be?

   a) Write/type out the equation

   b) Discuss (1-2 short paragraphs) why you picked that equation, what information that would give you on your business’ or department’s performance, and how you would use that to better your business/department.

3) Describe in 1-2 short paragraphs, a) the purpose of the following types of financial statements and b) why as a leader/manager you must be familiar with them:

   - Balance sheet

   - Income statement

   - Capital statement

Answer 1

1. As I see future career as a pharmacist and developing a business plan is essentially the first step in following the path, the main purpose of my business plan is that it serves as a road map / blueprint to the forthcoming journey of being a pharmacist. It would help me to set objectives, plan to achieve those objectives and to finally know what all has been achieved. Business plan would also help in get the finances and investments from interested parties as this would give them a clear view of the firm. Thus, making is very necessary. Some of the benefits of writing business plan are.

· Helps to set priorities

· Makes project accountable

· Forming strategies becomes easy

· Helps achieving milestones

· Focus on reaching goals.

2. The financial ratio, I would pick as a manager to review weekly / monthly basis cash flow to debt ratio

· Equation for it is: (net income + depreciation)/ total debt= cash flow to debt ration

· I choose this ration because though the business makes money still it would have cashflow problems as cash would go for debt payments. This ratio would help to know if there is a weak cash flow and red flag predictor being on, what immediate measures can be taken to improve cashflow and make due payments.

3. Purposes of following types of financial statements

· Balance sheet: it describes the details about company’s assets and liabilities at a particular point of time. Its purpose is to give details about the financial health of the company. Current financial situation in order to make best financial decisions.

· Income statement: it contains all the incomes and expenses of the company over a period of time which is usually one year. It is also called as profit and loss statement. Its main purpose is to show if the company is making profit and how much of profits are made.

· Capital statement: it is a statement that gives details about the changes in owner’s equity i.e. capital structure in a given point of time. The main purpose of this statement is to evaluate the capital structure and make the best capital structure for the firm.

· Leader or manager must be familiar with all of the above financial statements to be aware of financial health and stability of the company and self. These help in better evaluation of financial situations and taking right decision can be made.