Dental Accounting and Financial Management
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Questions and Answers

What is the formula to calculate Profit?

  • Revenue / Expenses
  • Revenue - Expenses (correct)
  • Revenue + Expenses
  • Expenses - Revenue

    • What does the term 'Production' refer to in a dental practice?

  • Total expenses incurred by the practice
  • Total dollar amount of dental treatment performed (correct)
  • Total salaries paid to employees
  • Payments made to the practice

    • What is the main purpose of a 'Working Capital' loan?

  • To finance day-to-day operations (correct)
  • To purchase long-term assets or investments
  • To pay salaries to employees
  • To reduce business expenses

    • What does the term 'Break even point' describe in dentistry?

    <p>The total cash requirements to pay the bills and keep the doors open</p> Signup and view all the answers

    What does EBITDA stand for?

    <p>Earnings before Interests, Taxes, Depreciation and Amortization</p> Signup and view all the answers

    What is the highest expense in most businesses, especially skilled services?

    <p>Salaries</p> Signup and view all the answers

    Study Notes

    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.

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    Description

    Understand key financial concepts in dentistry, including profit, production, collections, and break-even points. Learn how to manage your dental practice's finances effectively.

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