THE NEW YORK JOURNAL OF PHARMACY 



or decrease in the permanent stock 

 shown by the annual inventory. We 

 thus arrive at item 4, the cost of the 

 goods actually sold during- the }ear. 

 Deducting this amount from the sales, 

 we arrive at item 5. the gross profits. 

 Deducting in turn tlie expenses from 

 the gross profits we arrive at the net 

 profits. The druggists's total income, 

 item No. 8, is obtained by adding the 

 proprietor's salary, taken from the ex- 

 pense account, to the net profits. Items 

 Nos. 9 and 10 are self-explanatory. 



Now, it would be jiossible, and doubt- 

 less profitable, to comment at some 

 length on the various items in this sched- 

 ule, but I shall pass over them very 

 quickly. There is, for instance, a whole 

 lecture possible on the subject of ex- 

 pense alone. Very few druggists know 

 how to keep a proper expense account. 

 They fail to put things in it which be- 

 long there, and thus they arrive at a 

 low percentage of expense, which is very 

 deceptive and which costs them hun- 

 dreds of dollars annually. A proper ex- 

 pense account ought to include these 

 things: ( i ) taxes, (2) insurance, (3) 

 fuel, (4) light, (5) water, (6) rent, 

 (7) proprietor's salary, (8) clerk hire, 

 (9) advertising, (10) telephone, (ii) 

 telegraph, (12) office supplies, (13) 

 postage, (14) repairs, (15) delivery 

 service, (16) donations, (17) subscrip- 

 tions, (18) depreciation in stock and fix- 

 tures and losses in bad accounts. 



Rut you have drawn up your annual 

 statement, let us say, and you have done 

 it correctly. \'ery well, how shall you 

 produce from it the facts you want to 

 get at — in particular the four things 

 which I have declared every druggist 

 should know about his business? You 

 will rcmeml)cr I said that every drug- 



gist should know his percentage of ex- 

 pense, his percentage of gross profit, his 

 percentage of net profit, and his total 

 income from the store. 



Arriving at the Four Essentials. 



Your percentage of expense is gotten 

 by dividing total annual expenses by 

 total annual sales. Suppose, for in- 

 stance, you had annual sales of $12,000 

 and expenses of $3,600. Y^ou know at 

 once, then, that your percentage ex- 

 pense is 30. The percentage of gross 

 profit, on the other hand, is gotten by 

 dividing the total gross profit for the 

 year b\- the total sales. We have as- 

 sumed annual sales of $12,000; we may 

 go a step farther and assume gross prof- 

 its of $4,800; and we, therefore, find a 

 percentage of gross profit amounting to 

 40. What, next, is the net profit? The 

 net i)rofit is, of course, the difiference 

 between the percentage of expense and 

 the percentage of gross profit, and in 

 the present case we find this to be 10 

 l^er cent. 



As to the fourth requisite, the total 

 income from the business, this is easily 

 gotten by merely adding the proprietor's 

 salary, taken from the expense account, 

 to the total net profits. If, for instance, 

 the proprietor in this imaginary business 

 of $12,000 a year pays himself a salary 

 of $1,500, and makes net profits of $1,- 

 200, his total yield from the business is 

 $2,700. This, then, represents actually 

 what he has made from the store, with- 

 out any possible chance of deception. 



The Use of This Information. 



In what I have said so far I have 

 done little else but explain how a drug- 

 gist may keep a simple series of busi- 

 ness records so as to learn the import- 



