Medical Language Translation Business Plan

Global Health Translations

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Financial Plan

The following sections outline the Financial Plan for Global Health Translations.

7.1 Projected Cash Flow

The following is the projected cash flow for three years.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $68,250 $78,750 $92,500
Cash from Receivables $164,950 $230,127 $269,482
Subtotal Cash from Operations $233,200 $308,877 $361,982
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 $233,200 $308,877 $361,982
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $96,000 $110,000 $124,000
Bill Payments $135,937 $176,615 $209,462
Subtotal Spent on Operations $231,937 $286,615 $333,462
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $231,937 $286,615 $333,462
Net Cash Flow $1,263 $22,262 $28,520
Cash Balance $27,263 $49,526 $78,045

7.2 Break-even Analysis

The monthly break-even point is shown in the following table and chart.

Break-even Analysis
Monthly Revenue Break-even $17,449
Assumptions:
Average Percent Variable Cost 38%
Estimated Monthly Fixed Cost $10,738

7.3 Projected Profit and Loss

Global Health Translations will not see a profit until its second year of operation.  We estimate that sales will grow by a modest percentage the second and third year. The following is the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $273,000 $315,000 $370,000
Direct Cost of Sales $105,000 $128,000 $158,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $105,000 $128,000 $158,000
Gross Margin $168,000 $187,000 $212,000
Gross Margin % 61.54% 59.37% 57.30%
Expenses
Payroll $96,000 $110,000 $124,000
Sales and Marketing and Other Expenses $1,800 $2,700 $3,800
Depreciation $2,856 $2,856 $2,856
Leased Equipment $0 $0 $0
Utilities $1,800 $1,800 $1,800
Insurance $0 $0 $0
Rent $12,000 $12,000 $12,000
Payroll Taxes $14,400 $16,500 $18,600
Other $0 $0 $0
Total Operating Expenses $128,856 $145,856 $163,056
Profit Before Interest and Taxes $39,144 $41,144 $48,944
EBITDA $42,000 $44,000 $51,800
Interest Expense $5,000 $5,000 $5,000
Taxes Incurred $10,243 $10,843 $13,183
Net Profit $23,901 $25,301 $30,761
Net Profit/Sales 8.75% 8.03% 8.31%

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $27,263 $49,526 $78,045
Accounts Receivable $39,800 $45,923 $53,941
Other Current Assets $0 $0 $0
Total Current Assets $67,063 $95,449 $131,987
Long-term Assets
Long-term Assets $20,000 $20,000 $20,000
Accumulated Depreciation $2,856 $5,712 $8,568
Total Long-term Assets $17,144 $14,288 $11,432
Total Assets $84,207 $109,737 $143,419
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $14,307 $14,535 $17,456
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $14,307 $14,535 $17,456
Long-term Liabilities $50,000 $50,000 $50,000
Total Liabilities $64,307 $64,535 $67,456
Paid-in Capital $50,000 $50,000 $50,000
Retained Earnings ($54,000) ($30,099) ($4,798)
Earnings $23,901 $25,301 $30,761
Total Capital $19,901 $45,202 $75,962
Total Liabilities and Capital $84,207 $109,737 $143,419
Net Worth $19,901 $45,202 $75,962

7.5 Business Ratios

Business ratios for the years of this plan are shown below.  Industry profile ratios based on the Standard Industrial Classification (SIC) code 7389, Language Translation and Interpretation Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 15.38% 17.46% 8.20%
Percent of Total Assets
Accounts Receivable 47.26% 41.85% 37.61% 26.30%
Other Current Assets 0.00% 0.00% 0.00% 44.20%
Total Current Assets 79.64% 86.98% 92.03% 74.30%
Long-term Assets 20.36% 13.02% 7.97% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.99% 13.25% 12.17% 49.00%
Long-term Liabilities 59.38% 45.56% 34.86% 13.80%
Total Liabilities 76.37% 58.81% 47.03% 62.80%
Net Worth 23.63% 41.19% 52.97% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 61.54% 59.37% 57.30% 0.00%
Selling, General & Administrative Expenses 52.70% 51.14% 48.71% 81.40%
Advertising Expenses 0.00% 0.00% 0.00% 1.70%
Profit Before Interest and Taxes 14.34% 13.06% 13.23% 2.10%
Main Ratios
Current 4.69 6.57 7.56 1.49
Quick 4.69 6.57 7.56 1.17
Total Debt to Total Assets 76.37% 58.81% 47.03% 62.80%
Pre-tax Return on Net Worth 171.57% 79.96% 57.85% 4.20%
Pre-tax Return on Assets 40.55% 32.94% 30.64% 11.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 8.75% 8.03% 8.31% n.a
Return on Equity 120.10% 55.97% 40.49% n.a
Activity Ratios
Accounts Receivable Turnover 5.14 5.14 5.14 n.a
Collection Days 57 66 66 n.a
Accounts Payable Turnover 10.50 12.17 12.17 n.a
Payment Days 28 30 27 n.a
Total Asset Turnover 3.24 2.87 2.58 n.a
Debt Ratios
Debt to Net Worth 3.23 1.43 0.89 n.a
Current Liab. to Liab. 0.22 0.23 0.26 n.a
Liquidity Ratios
Net Working Capital $52,757 $80,914 $114,530 n.a
Interest Coverage 7.83 8.23 9.79 n.a
Additional Ratios
Assets to Sales 0.31 0.35 0.39 n.a
Current Debt/Total Assets 17% 13% 12% n.a
Acid Test 1.91 3.41 4.47 n.a
Sales/Net Worth 13.72 6.97 4.87 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $68,250 $78,750 $92,500
Cash from Receivables $164,950 $230,127 $269,482
Subtotal Cash from Operations $233,200 $308,877 $361,982
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 $233,200 $308,877 $361,982
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $96,000 $110,000 $124,000
Bill Payments $135,937 $176,615 $209,462
Subtotal Spent on Operations $231,937 $286,615 $333,462
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 $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $231,937 $286,615 $333,462
Net Cash Flow $1,263 $22,262 $28,520
Cash Balance $27,263 $49,526 $78,045
Break-even Analysis
Monthly Revenue Break-even $17,449
Assumptions:
Average Percent Variable Cost 38%
Estimated Monthly Fixed Cost $10,738
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $273,000 $315,000 $370,000
Direct Cost of Sales $105,000 $128,000 $158,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $105,000 $128,000 $158,000
Gross Margin $168,000 $187,000 $212,000
Gross Margin % 61.54% 59.37% 57.30%
Expenses
Payroll $96,000 $110,000 $124,000
Sales and Marketing and Other Expenses $1,800 $2,700 $3,800
Depreciation $2,856 $2,856 $2,856
Leased Equipment $0 $0 $0
Utilities $1,800 $1,800 $1,800
Insurance $0 $0 $0
Rent $12,000 $12,000 $12,000
Payroll Taxes $14,400 $16,500 $18,600
Other $0 $0 $0
Total Operating Expenses $128,856 $145,856 $163,056
Profit Before Interest and Taxes $39,144 $41,144 $48,944
EBITDA $42,000 $44,000 $51,800
Interest Expense $5,000 $5,000 $5,000
Taxes Incurred $10,243 $10,843 $13,183
Net Profit $23,901 $25,301 $30,761
Net Profit/Sales 8.75% 8.03% 8.31%
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $27,263 $49,526 $78,045
Accounts Receivable $39,800 $45,923 $53,941
Other Current Assets $0 $0 $0
Total Current Assets $67,063 $95,449 $131,987
Long-term Assets
Long-term Assets $20,000 $20,000 $20,000
Accumulated Depreciation $2,856 $5,712 $8,568
Total Long-term Assets $17,144 $14,288 $11,432
Total Assets $84,207 $109,737 $143,419
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $14,307 $14,535 $17,456
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $14,307 $14,535 $17,456
Long-term Liabilities $50,000 $50,000 $50,000
Total Liabilities $64,307 $64,535 $67,456
Paid-in Capital $50,000 $50,000 $50,000
Retained Earnings ($54,000) ($30,099) ($4,798)
Earnings $23,901 $25,301 $30,761
Total Capital $19,901 $45,202 $75,962
Total Liabilities and Capital $84,207 $109,737 $143,419
Net Worth $19,901 $45,202 $75,962
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 15.38% 17.46% 8.20%
Percent of Total Assets
Accounts Receivable 47.26% 41.85% 37.61% 26.30%
Other Current Assets 0.00% 0.00% 0.00% 44.20%
Total Current Assets 79.64% 86.98% 92.03% 74.30%
Long-term Assets 20.36% 13.02% 7.97% 25.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.99% 13.25% 12.17% 49.00%
Long-term Liabilities 59.38% 45.56% 34.86% 13.80%
Total Liabilities 76.37% 58.81% 47.03% 62.80%
Net Worth 23.63% 41.19% 52.97% 37.20%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 61.54% 59.37% 57.30% 0.00%
Selling, General & Administrative Expenses 52.70% 51.14% 48.71% 81.40%
Advertising Expenses 0.00% 0.00% 0.00% 1.70%
Profit Before Interest and Taxes 14.34% 13.06% 13.23% 2.10%
Main Ratios
Current 4.69 6.57 7.56 1.49
Quick 4.69 6.57 7.56 1.17
Total Debt to Total Assets 76.37% 58.81% 47.03% 62.80%
Pre-tax Return on Net Worth 171.57% 79.96% 57.85% 4.20%
Pre-tax Return on Assets 40.55% 32.94% 30.64% 11.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 8.75% 8.03% 8.31% n.a
Return on Equity 120.10% 55.97% 40.49% n.a
Activity Ratios
Accounts Receivable Turnover 5.14 5.14 5.14 n.a
Collection Days 57 66 66 n.a
Accounts Payable Turnover 10.50 12.17 12.17 n.a
Payment Days 28 30 27 n.a
Total Asset Turnover 3.24 2.87 2.58 n.a
Debt Ratios
Debt to Net Worth 3.23 1.43 0.89 n.a
Current Liab. to Liab. 0.22 0.23 0.26 n.a
Liquidity Ratios
Net Working Capital $52,757 $80,914 $114,530 n.a
Interest Coverage 7.83 8.23 9.79 n.a
Additional Ratios
Assets to Sales 0.31 0.35 0.39 n.a
Current Debt/Total Assets 17% 13% 12% n.a
Acid Test 1.91 3.41 4.47 n.a
Sales/Net Worth 13.72 6.97 4.87 n.a
Dividend Payout 0.00 0.00 0.00 n.a