Here are some simple business ratios that are worth conducting on your business (with suggestions for acceptable values in brackets):
Return on capital employed = profit before tax/capital employed (>15 per cent)
Current ratio = current assets/current liabilities (>1)
Interest cover = profit before interest/interest (>2)
Stock turnover = turnover/stock (>12)
Salary ratios = pharmacist wages/turnover (<8 per cent) = non-pharmacist wages/turnover (<6 per cent)
References and further reading
Hill N. Think and Grow Rich. San Diego: Aventine Press; 2004 Lundin SC et al. FISH! London: Hodder Paperbacks; 2002 Evans P, Wurster TS. Blown to Bits. Boston: Harvard Business School Press; 1999 Blanchard K. One Minute Manager. New York: Harper; 2011 Johnson S. Who Moved My Cheese? London: Vermillion; 1999 Covey SR. The 7 Habits of Highly Effective People. London: Simon & Schuster Ltd; 2004 Porter M. Competitive Strategy. London: Free Press; 2004 Kim WC, Mauborgne R. Blue Ocean Strategy. Boston: Harvard Business School Press; 2005
The next step is to put these ideas into action. Finish by recording your learning outcomes.
