Dental Accounting and Financial Management

Financial Concepts in Dentistry

• Profit is calculated by subtracting Expenses from Revenue.
• Production refers to the total dollar amount of dental treatment performed by a provider or practice in a given time frame.
• Collections refer to payments made to the practice and deposited in the business bank account, including cash, credit cards, financing, and insurance.
• Collections Ratio is the calculated percentage of Collections divided by Adjusted Production for a given month or year.
• Break-even point is the total cash requirements to pay the bills and keep the practice open, where collections equal total operating expenses.
• Salaries are typically the highest expense in most businesses, especially skilled services like dentistry.
• Working Capital is the available cash needed for day-to-day operations, not used to purchase long-term assets or investments.
• Doing Business as (DBA) associates a business entity trade name with a legal structure/organization name.
• EBITDA (Earnings before Interests, Taxes, Depreciation, and Amortization) is related to business valuation.