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MODULE 1

Pharmacy TechnicianWeb Based Calculations Review

P R E S E N T E D B Y:J e n i f e r M a k i , P h a r m D

W I T H C O N T R I B U T I O N S F R O M :B r e t t S a l e m , P h a r m DD e r e k L o m a s , P h a r m D

Objectives

Understand the use and conversion of fractions, decimals, percents and ratios. Additionally, know how to add, subtract, multiply and divide each.

Convert temperature readings between Celsius and Fahrenheit.

Understand business math as it relates to pharmacy practice including discounts, profit, reimbursement and inventory turnover.

Fractions

Numerator: top number

Denominator: bottom numberSimple Fractions: 1/2 , 3/4

Improper Fractions: 6/5, 11/6, 17/8

Reducing Fractions:Always convert to the lowest possible term

Examples8/32 = 1/4

5/125 = 1/25 10/25 = 2/5

4/16 = 1/4

Fractions

Adding and Subtracting Fractions1. Convert compound fractions into improper fractions

1 ½ = 3/2

2. If denominators not the same find the least common denominatorsdenominators

3/2 + 1/4 = 6/4 + 1/4

3. Add or Subtract the numerators6/4 + 1/4 = 7/4 = 1 ¾

6/4 - 1/4 = 5/4 = 1 ¼

Add Fractions Example

6/8 + 1/3 =

Add Fractions- Answer

6/8 + 1/3 =

(6/8 x 3/3) + (1/3 x 8/8) =

18/24 + 8/24 =

26/24 = 13/12 = 11/12

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Subtract Fractions- Example

6/ 1/6/8 – 1/3 =

Subtract Fractions- Answer

6/8 - 1/3 =

(6/8 x 3/3) - (1/3 x 8/8) =

18/24 - 8/24 =

10/24 = 5/12

Fractions

Multiplication of FractionsMultiply both numerators and denominators1/8 x 1/2 = 1/16

1/2 x 3/4 = 3/8

Dividing FractionsDividing FractionsInvert fraction (reciprocal) then multiply3/4 ÷ 1/3 = 3/4 x 3/1 = 9/4 = 2 ¼

10 ÷ 1/4 = 10/1 x 4/1 = 40/1 = 40

Multiply Fractions Example

3/ 1/3/5 x 1/4 =

Multiply Fractions Answer

3/5 x 1/4 =

multiply numerators:

3 1 3

Answer: 3/3 x 1 = 3

multiply denominators:

5 x 4 = 20

3/20

Divide Fractions Example

3/5 ÷ 1/4 =

3

Divide Fractions - Answer

3/5 ÷ 1/4 =

Find the reciprocal: 3/5 ÷ 4/1 =

Multiple numerators 3 x 4 12Multiple numerators: 3 x 4 = 12

Multiple denominators: 5 x 1 = 5

Answer: 12/5 = 2 2/5

Decimals

Converting Fractions to DecimalsDivide numerator by the denominator1 divided by 3 = 0.3333 , 3/4 = 0.75

Converting Decimals to FractionsRemove decimal and use number as numerator Then count number of places to the right of the decimal point – denominator should be 1+ the number of zeros 2.33 = 100● 2.33 = 233/100

● 0.5 = 5/10 = 1/2

Decimals to Fractions Example

Convert the following decimal to a fraction:

0.0625

Decimal to Fraction Answer

0.0625 = 625/10000 =

**move the decimal 4 places on the numerator, h f 4 h d itherefore 4 zeros on the denominator

reduce numerator and denominator by 625

Answer= 1/16

Percentages

Number of Parts out of 10099% is 99 parts of the total of 100

50% mixture of water and sugar means that of the50% mixture of water and sugar means that of the 100 parts total 50 are water and 50 are sugar

Percentages

Converting between percents, decimals and fractions

55% = 55/100 = 0.55

0.2 = 20% = 20/100

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Percentages Example

Convert the following fraction to a percentage:

5/16

Percentage Answer

5/16 =

5 ÷ 16 = 0.3125 x 100 = 31.25%

Ratios

A ratio is a numerical representation of the relationship between parts of a whole.1:2 reads 1 part out of 2 parts OR 1/2

Conversion Examplesp2/5 = 2:5 = 40% = 0.42/5 = 4/10 = 40/100

2:5 = 4:10 = 40:10040% = 40/100

0.4 = 40/100

Ratio Example

Convert the following ratio to a percentage:

1:2500

Ratio- Answer

1 ÷ 2500 = 0.0004 x 100 =

0.04%

Proportions

Expression of the equality of two ratios or fractions

90% is equal to 90/100 which is equal to 90:100

You can solve for an unknown (x) using proportions

50g = x g

80mL 40mL80mL 40mL

Be sure units match (grams in numerator, mL in denominator)

Cross multiply ( 50g X 40mL = 2,000 g mL)

Divide (2,000 g mL ÷ 80mL = 25g)

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Proportions Example

If 7 tablets contain 35mg of drug, how many tablets would contain 1500mg?tablets would contain 1500mg?

Answer-Ratio and Proportion

35mg = 1500mg

7 tabs x tabs

Solve for x

X = 300 tablets

Temperature Conversions

Centigrade (°C) to Fahrenheit (°F)

32 + (9÷5)(°C) = °F

Fahrenheit (°F) to Centigrade (°C)

(5÷9) (°F – 32) = °C

Temperature ConversionsExample

If your pharmacy refrigerator used for storing medications must be set at 2-8°C, what does that equal in °F?

Temperature ConversionAnswer

32 + (9÷5)(°C) = °FInsert information from the problem:

32 + (9÷5)(2) =32 + (1.8)(2)=( )( )32 + 3.6= 35.6 °F

And32 + (9÷5)(8) = 46.4 °F

Answer = 35.6 - 46.4 °F

Temperature ConversionsExample #2

A mother from the UK comes to the pharmacy for a thermometer. As you help her select a new digital thermometer for use in her infant she is concerned that the units are °F. If a normal (healthy) temperature is 97.5 °F - 99.0 °F, what is the equivalent in °C?

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Temperature ConversionAnswer #2

(5÷9) (°F – 32) = °C

Insert information from the problem:

(5÷9) (97.5 – 32) =

°(0.556) (65.5) = 36.4°CAnd

(5÷9) (99 – 32) = 37.2°C

Answer = 36.4 - 37.2°C

Business Math

DiscountsPharmacies may offer discounts to their patients and/or a manufacturer offers discounts to a pharmacy.

Purchase Price x Discount Rate = Discount

Purchase Price – Discount = Discounted Price

Business Math – Discounts Example

A local pharmacy offers a 15% Senior Citizen discount on all prescription medications. Joe’s medication costs $75. How much will he pay for his prescription if he is eligible for the discount?

Business Math- DiscountsAnswer

Purchase Price x Discount Rate = Discount

$75 X 0.15 = $11.25

Purchase Price – Discount = Discounted PricePurchase Price Discount = Discounted Price

$75 – $11.25 = $63.75

Joe will pay $63.75 for his medication.

Business Math – Discounts Example #2

If the pharmacy orders 5 cases of a medication they receive a 20% discount. A case costs $100 before discount. What is the total purchase price of 5 cases after the discount?

Business Math – Discounts Answer #2

5 cases X $100 per case =

$500 (total purchase price)

$500 X .20 = $100 discount

$500 - $100 = $400 discount purchase price

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Business Math

Net ProfitThe difference between the selling price and the overall cost● Profit = selling price – overall costThe overall cost is the purchase price of the medication and the sum of all the cost associated withmedication and the sum of all the cost associated with filling a prescription.

Gross ProfitThe difference between the selling price and the purchase price with out regard to the cost of preparing and dispensing the medication. Can also be referred to as markup.

Business Math – Profit Example

Calculate the net profit for a medication that costs the pharmacy $55 and sells for $78. The cost to dispense the medication is $2.05.

Business Math – Profit Answer

Selling price – overall cost = Profit

$78 – ($55 + $2.05) = $20.95 profit

Business Math – Profit Example #2

What is the markup of a prescription that is bought by the pharmacy for $75 and sold for $100?

Business Math – Profit Answer #2

selling price – purchase price = gross profit (markup)

$100 - $75 = $25 markup

Business Math

AWP: Average Wholesale Price

Theoretical price a pharmacy pays for a medication

Average price that wholesalers charge pharmacies

Usually insurance companies (third parties)Usually insurance companies (third parties) reimburse pharmacies based upon AWP.

Goal for pharmacies to purchase medications below AWP

Prescription Reimbursement =

AWP +/- Percentage + dispensing fee

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Business Math – AWP Example

A prescription for a tube of medication is submitted to insurance. The AWP is $52. The local pharmacy has purchased this medication for AWP minus 10%. The insurance will reimburse at AWP plus 2% plus a $1.50 dispensing fee. How much gross profit did this pharmacy make?

Business Math – AWP Answer

First find the purchase price of the prescription:$52 X .10 = $5.20

$52 - $5.20 = $46.80

Next calculate the reimbursement:Prescription Reimbursement = AWP +/- Percentage + dispensing fee

$52 + 2% + $1.50 = $52 + ($52 x 0.02) + $1.50 = $54.54

Finally Calculate Profit:

Profit = $54.54 – $46.80 = $7.74 Pharmacy Profit

Business Math

Inventory:Itemized list of merchandise and cost in pharmacy

●Turnover Rate:H f h l i i ldHow often the total inventory is sold over a specific period of time

Turnover rate = annual dollar purchasesaverage inventory value

Business Math – InventoryExample

A pharmacy does a quarterly inventory and has an average inventory value of $100,000. Annual purchases are $500,000. What is the turnover rate?

Business Math – InventoryAnswer

Turnover rate = annual dollar purchases

average inventory value

Turnover rate = $500,000 = 5= $ , = 5$100,000

The inventory turns over 5 times per quarter.

Business Math - Example

ExampleIf you paid $0.20 per capsule for a bottle containing 100 capsules, what is the total cost of the bottle of capsules?

$0.2 x 100 = $20

If you wanted to make $0.05 profit per capsule, what would be the selling price of 1 capsule?

$0.20 + $0.05 = $0.25

What would be the selling price of 30 capsules?

$0.25 x 30 = $7.50

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Business Math

ExampleA pharmacy accountant reported this information after an annual inventory:

● Total annual overhead expenses = $850,000p $ ,

● Total Inventory purchases = $2,670,000

● Total Sales = $4,300,000

● Average Inventory = $520,000

Example cont.

What is the gross profit of the pharmacy?$4,300,000 - $2,670,000 = $1,630,000

What is the net profit?$4,300,000 – ($2,670,000 + $850,000) = $780,000$4,300,000 ($2,670,000 $850,000) $780,000

If the owner decided to give her pharmacy technician 5% of the net profit, how much would this be? 0.05 x $780,000 = $39,000

What is the inventory turnover rate?$2,670,000/$520,000 = 5.13

Please join me for Modules 2 and 3.

Thank You!!!!

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