A  January ,Pi907m'}    Four  Things  Every  Druggist  Should  Know.  17 
Now  to  begin  by  summarizing  in  a  single  paragraph  what  the 
necessities  of  the  case  require,  let  me  say  that  the  only  records 
which  are  absolutely  essential,  and  ,  to  which  I  shall  consequently 
confine  myself  in  this  paper,  are  those  involving  (1)  the  sales,  (2) 
the  purchases,  (3)  the  expenses,  (4)  the  inventory,  and  (5)  the  pur- 
chases and  sales  of  departments  like  soda,  candy,  cigars,  and  any 
other  line  that  the  proprietor  might  want  to  watch  for  a  year  or 
perhaps  constantly.  This  is  all — and  it  is  certainly  easy  and  simple 
enough.  If  in  addition  a  cash  book  is  kept,  so  much  the  better, 
but  I  am  confining  myself  in  this  paper  to  the  absolute  essentials. 
Deduct  the  annual  purchases  from  the  annual  sales  and  you  have 
the  gross  profits.  Deduct  the  expenses  from  the  gross  profits  and 
you  have  the  net  profits.  But  you  need  two  checks  on  these  figures, 
and  these  are  provided  by  the  inventory  and  the  accumulation  of 
surplus  cash  in  the  bank  or  elsewhere.  The  inventory  may  show 
that  the  stock  has  increased  or  decreased,  and  you  may  consequently 
have  made  several  hundred  dollars  more  or  less  than  you  would 
otherwise  imagine.1  Any  increase  in  the  inventory  should  be  added 
to  the  gross  and  net  profits;  any  decrease  should  be  deducted  from 
them. 
This  would  give  you  the  final  figures  except  for  the  additional 
check  provided  by  the  cash  accumulations.  To  go  back  a  little,  we 
have  seen  that  the  net  profits  as  first  calculated  are  to  be  supple- 
mented by  the  extent  to  which  the  stock  has  increased.  A  small 
portion  of  the  year's  profits,  then,  are  represented  in  stock,  and  the 
remainder  in  cash.  Now,  waiving  the  item  of  stock  appreciation 
and  considering  only  the  cash  returns,  it  is  evident  that  the  latter 
must  tally  approximately  with  the  money  which  has  accumulated  in 
the  regular  bank  account,  plus  any  amounts  which  you  may  have 
drawn  out  during  the  year  in  excess  of  your  definite  salary  or  for 
outside  investments.  Sometimes  a  difference  is  disclosed  here  that 
changes  the  results  considerably  ;  and  indeed  no  druggist  is  in  posi- 
tion to  estimate  his  profits  for  the  year  accurately  unless  he  corrects 
them  by  means  of  the  inventory  and  careful  cash  records. 
1  A  Toronto  druggist,  failing  to  take  an  inventory  for  two  years,  found  that 
his  stock  had  increased  $1,600.  An  Indianapolis  druggist,  on  the  contrary,  was 
surprised  to  find  last  year  that  his  stock  had  decreased  over  $500.  Many  actual 
instances  could  be  cited  to  show  what  fluctuations  the  inventory  discloses,  and 
how  markedly  it  changes  the  results. 
