The Tooth Fairy

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Dental Office Business Plan

Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break-even point.

Break-even Analysis
Monthly Revenue Break-even $22,025
Assumptions:
Average Percent Variable Cost 33%
Estimated Monthly Fixed Cost $14,851

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $176,872 $349,888 $410,568
Direct Cost of Sales $57,612 $100,239 $118,047
Other Production Expenses $0 $0 $0
Total Cost of Sales $57,612 $100,239 $118,047
Gross Margin $119,260 $249,649 $292,521
Gross Margin % 67.43% 71.35% 71.25%
Expenses
Payroll $121,700 $140,400 $166,000
Sales and Marketing and Other Expenses $2,700 $2,700 $2,700
Depreciation $10,356 $863 $863
ADA dues $600 $600 $600
Utilities $1,800 $1,800 $1,800
Insurance- office and malpractice $4,800 $4,800 $4,800
Rent $18,000 $18,000 $18,000
Payroll Taxes $18,255 $21,060 $24,900
Other $0 $0 $0
Total Operating Expenses $178,211 $190,223 $219,663
Profit Before Interest and Taxes ($58,951) $59,426 $72,858
EBITDA ($48,595) $60,289 $73,721
Interest Expense $9,670 $9,053 $8,362
Taxes Incurred $0 $15,112 $19,349
Net Profit ($68,621) $35,261 $45,147
Net Profit/Sales -38.80% 10.08% 11.00%

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $176,872 $349,888 $410,568
Subtotal Cash from Operations $176,872 $349,888 $410,568
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $176,872 $349,888 $410,568
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $121,700 $140,400 $166,000
Bill Payments $100,579 $171,973 $196,487
Subtotal Spent on Operations $222,279 $312,373 $362,487
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $6,185 $6,576 $7,232
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $228,464 $318,949 $369,719
Net Cash Flow ($51,592) $30,939 $40,849
Cash Balance $16,508 $47,447 $88,296

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $16,508 $47,447 $88,296
Other Current Assets $0 $0 $0
Total Current Assets $16,508 $47,447 $88,296
Long-term Assets
Long-term Assets $51,800 $51,800 $51,800
Accumulated Depreciation $10,356 $11,219 $12,082
Total Long-term Assets $41,444 $40,581 $39,718
Total Assets $57,952 $88,028 $128,014
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $12,858 $14,249 $16,320
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $12,858 $14,249 $16,320
Long-term Liabilities $93,815 $87,239 $80,007
Total Liabilities $106,672 $101,488 $96,327
Paid-in Capital $51,000 $51,000 $51,000
Retained Earnings ($31,100) ($99,721) ($64,460)
Earnings ($68,621) $35,261 $45,147
Total Capital ($48,721) ($13,460) $31,688
Total Liabilities and Capital $57,952 $88,028 $128,014
Net Worth ($48,721) ($13,460) $31,688

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8021, Offices of Dentists, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 97.82% 17.34% 6.10%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 45.00%
Total Current Assets 28.49% 53.90% 68.97% 62.20%
Long-term Assets 71.51% 46.10% 31.03% 37.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 22.19% 16.19% 12.75% 30.10%
Long-term Liabilities 161.88% 99.10% 62.50% 30.10%
Total Liabilities 184.07% 115.29% 75.25% 60.20%
Net Worth -84.07% -15.29% 24.75% 39.80%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 67.43% 71.35% 71.25% 0.00%
Selling, General & Administrative Expenses 106.22% 61.27% 60.25% 68.30%
Advertising Expenses 1.36% 0.69% 0.58% 1.60%
Profit Before Interest and Taxes -33.33% 16.98% 17.75% 3.40%
Main Ratios
Current 1.28 3.33 5.41 2.11
Quick 1.28 3.33 5.41 1.70
Total Debt to Total Assets 184.07% 115.29% 75.25% 60.20%
Pre-tax Return on Net Worth 140.85% -374.25% 203.54% 10.00%
Pre-tax Return on Assets -118.41% 57.22% 50.38% 25.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -38.80% 10.08% 11.00% n.a
Return on Equity 0.00% 0.00% 142.48% n.a
Activity Ratios
Accounts Payable Turnover 8.82 12.17 12.17 n.a
Payment Days 27 29 28 n.a
Total Asset Turnover 3.05 3.97 3.21 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 3.04 n.a
Current Liab. to Liab. 0.12 0.14 0.17 n.a
Liquidity Ratios
Net Working Capital $3,650 $33,198 $71,976 n.a
Interest Coverage -6.10 6.56 8.71 n.a
Additional Ratios
Assets to Sales 0.33 0.25 0.31 n.a
Current Debt/Total Assets 22% 16% 13% n.a
Acid Test 1.28 3.33 5.41 n.a
Sales/Net Worth 0.00 0.00 12.96 n.a
Dividend Payout 0.00 0.00 0.00 n.a