Medical Services Management Business Plan

The Medical Group

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Financial Plan

The company is raising funding to complete development through Year 2 of operation.  

8.1 Important Assumptions

The following table presents some assumptions that are necessary to the success of TMG.

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 25.42% 25.00% 25.42%
Other 0 0 0

8.2 Break-even Analysis

The chart and table below outline present the Break-even Analysis for TMG.

Break-even Analysis
Monthly Revenue Break-even $69,700
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $63,217

8.3 Projected Profit and Loss

The company is in the early stage of development, thus initial projections have only been made on accounts that are believed to most drive the income statement. 

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $1,075,000 $16,125,000 $45,125,000
Direct Cost of Sales $100,000 $1,500,000 $3,000,000
Other $38,000 $570,000 $600,000
Total Cost of Sales $138,000 $2,070,000 $3,600,000
Gross Margin $937,000 $14,055,000 $41,525,000
Gross Margin % 87.16% 87.16% 92.02%
Expenses
Payroll $256,522 $453,066 $608,696
Sales and Marketing and Other Expenses $382,000 $2,163,810 $3,366,850
Depreciation $8,400 $0 $0
Continued education $36,000 $517,500 $575,500
Utilities $3,600 $4,000 $4,500
Insurance $9,600 $20,000 $25,000
Rent $24,000 $25,000 $25,000
Payroll Taxes $38,478 $67,960 $91,304
Other $0 $0 $0
Total Operating Expenses $758,600 $3,251,336 $4,696,850
Profit Before Interest and Taxes $178,400 $10,803,664 $36,828,150
EBITDA $186,800 $10,803,664 $36,828,150
Interest Expense $0 $0 $0
Taxes Incurred $42,564 $2,700,916 $9,360,488
Net Profit $135,835 $8,102,748 $27,467,662
Net Profit/Sales 12.64% 50.25% 60.87%

8.4 Projected Cash Flow

The cash flow projections are presented in the following chart and table.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $868,500 $13,234,000 $39,554,302
Subtotal Cash from Operations $868,500 $13,234,000 $39,554,302
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 $500,000 $0 $0
Subtotal Cash Received $1,368,500 $13,234,000 $39,554,302
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $256,522 $453,066 $608,696
Bill Payments $616,643 $7,004,661 $16,269,509
Subtotal Spent on Operations $873,165 $7,457,727 $16,878,205
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 $500,000 $2,000,000 $8,000,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,373,165 $9,457,727 $24,878,205
Net Cash Flow ($4,665) $3,776,273 $14,676,097
Cash Balance $245,335 $4,021,608 $18,697,706

8.5 Projected Balance Sheet

The table below provides TMG's projected balance sheet for 2000-2002. 

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $245,335 $4,021,608 $18,697,706
Accounts Receivable $206,500 $3,097,500 $8,668,198
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $456,835 $7,124,108 $27,370,903
Long-term Assets
Long-term Assets $500,000 $2,500,000 $10,500,000
Accumulated Depreciation $8,400 $8,400 $8,400
Total Long-term Assets $491,600 $2,491,600 $10,491,600
Total Assets $948,435 $9,615,708 $37,862,503
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $57,599 $622,125 $1,401,258
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $57,599 $622,125 $1,401,258
Long-term Liabilities $0 $0 $0
Total Liabilities $57,599 $622,125 $1,401,258
Paid-in Capital $850,000 $850,000 $850,000
Retained Earnings ($95,000) $40,835 $8,143,584
Earnings $135,835 $8,102,748 $27,467,662
Total Capital $890,835 $8,993,584 $36,461,245
Total Liabilities and Capital $948,435 $9,615,708 $37,862,503
Net Worth $890,835 $8,993,584 $36,461,245

8.6 Business Ratios

The following table contains important business ratios for the offices and clinics of medical doctors industry, as determined by the Standard Industry Classification (SIC) Index code 8011, Offices & Clinics of Medical Doctors.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 1400.00% 179.84% 5.90%
Percent of Total Assets
Accounts Receivable 21.77% 32.21% 22.89% 10.00%
Other Current Assets 0.53% 0.05% 0.01% 50.50%
Total Current Assets 48.17% 74.09% 72.29% 60.80%
Long-term Assets 51.83% 25.91% 27.71% 39.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 6.07% 6.47% 3.70% 39.80%
Long-term Liabilities 0.00% 0.00% 0.00% 14.10%
Total Liabilities 6.07% 6.47% 3.70% 53.90%
Net Worth 93.93% 93.53% 96.30% 46.10%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 87.16% 87.16% 92.02% 0.00%
Selling, General & Administrative Expenses 74.72% 36.91% 30.81% 57.10%
Advertising Expenses 6.14% 6.05% 2.77% 0.40%
Profit Before Interest and Taxes 16.60% 67.00% 81.61% 2.00%
Main Ratios
Current 7.93 11.45 19.53 1.37
Quick 7.93 11.45 19.53 1.12
Total Debt to Total Assets 6.07% 6.47% 3.70% 53.90%
Pre-tax Return on Net Worth 20.03% 120.13% 101.01% 6.90%
Pre-tax Return on Assets 18.81% 112.35% 97.27% 15.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 12.64% 50.25% 60.87% n.a
Return on Equity 15.25% 90.09% 75.33% n.a
Activity Ratios
Accounts Receivable Turnover 5.21 5.21 5.21 n.a
Collection Days 57 37 48 n.a
Accounts Payable Turnover 11.71 12.17 12.17 n.a
Payment Days 27 16 22 n.a
Total Asset Turnover 1.13 1.68 1.19 n.a
Debt Ratios
Debt to Net Worth 0.06 0.07 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $399,235 $6,501,984 $25,969,645 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.88 0.60 0.84 n.a
Current Debt/Total Assets 6% 6% 4% n.a
Acid Test 4.35 6.47 13.35 n.a
Sales/Net Worth 1.21 1.79 1.24 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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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 25.42% 25.00% 25.42%
Other 0 0 0
Break-even Analysis
Monthly Revenue Break-even $69,700
Assumptions:
Average Percent Variable Cost 9%
Estimated Monthly Fixed Cost $63,217
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $1,075,000 $16,125,000 $45,125,000
Direct Cost of Sales $100,000 $1,500,000 $3,000,000
Other $38,000 $570,000 $600,000
Total Cost of Sales $138,000 $2,070,000 $3,600,000
Gross Margin $937,000 $14,055,000 $41,525,000
Gross Margin % 87.16% 87.16% 92.02%
Expenses
Payroll $256,522 $453,066 $608,696
Sales and Marketing and Other Expenses $382,000 $2,163,810 $3,366,850
Depreciation $8,400 $0 $0
Continued education $36,000 $517,500 $575,500
Utilities $3,600 $4,000 $4,500
Insurance $9,600 $20,000 $25,000
Rent $24,000 $25,000 $25,000
Payroll Taxes $38,478 $67,960 $91,304
Other $0 $0 $0
Total Operating Expenses $758,600 $3,251,336 $4,696,850
Profit Before Interest and Taxes $178,400 $10,803,664 $36,828,150
EBITDA $186,800 $10,803,664 $36,828,150
Interest Expense $0 $0 $0
Taxes Incurred $42,564 $2,700,916 $9,360,488
Net Profit $135,835 $8,102,748 $27,467,662
Net Profit/Sales 12.64% 50.25% 60.87%
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $0 $0 $0
Cash from Receivables $868,500 $13,234,000 $39,554,302
Subtotal Cash from Operations $868,500 $13,234,000 $39,554,302
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 $500,000 $0 $0
Subtotal Cash Received $1,368,500 $13,234,000 $39,554,302
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $256,522 $453,066 $608,696
Bill Payments $616,643 $7,004,661 $16,269,509
Subtotal Spent on Operations $873,165 $7,457,727 $16,878,205
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 $500,000 $2,000,000 $8,000,000
Dividends $0 $0 $0
Subtotal Cash Spent $1,373,165 $9,457,727 $24,878,205
Net Cash Flow ($4,665) $3,776,273 $14,676,097
Cash Balance $245,335 $4,021,608 $18,697,706
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $245,335 $4,021,608 $18,697,706
Accounts Receivable $206,500 $3,097,500 $8,668,198
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $456,835 $7,124,108 $27,370,903
Long-term Assets
Long-term Assets $500,000 $2,500,000 $10,500,000
Accumulated Depreciation $8,400 $8,400 $8,400
Total Long-term Assets $491,600 $2,491,600 $10,491,600
Total Assets $948,435 $9,615,708 $37,862,503
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $57,599 $622,125 $1,401,258
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $57,599 $622,125 $1,401,258
Long-term Liabilities $0 $0 $0
Total Liabilities $57,599 $622,125 $1,401,258
Paid-in Capital $850,000 $850,000 $850,000
Retained Earnings ($95,000) $40,835 $8,143,584
Earnings $135,835 $8,102,748 $27,467,662
Total Capital $890,835 $8,993,584 $36,461,245
Total Liabilities and Capital $948,435 $9,615,708 $37,862,503
Net Worth $890,835 $8,993,584 $36,461,245
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 1400.00% 179.84% 5.90%
Percent of Total Assets
Accounts Receivable 21.77% 32.21% 22.89% 10.00%
Other Current Assets 0.53% 0.05% 0.01% 50.50%
Total Current Assets 48.17% 74.09% 72.29% 60.80%
Long-term Assets 51.83% 25.91% 27.71% 39.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 6.07% 6.47% 3.70% 39.80%
Long-term Liabilities 0.00% 0.00% 0.00% 14.10%
Total Liabilities 6.07% 6.47% 3.70% 53.90%
Net Worth 93.93% 93.53% 96.30% 46.10%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 87.16% 87.16% 92.02% 0.00%
Selling, General & Administrative Expenses 74.72% 36.91% 30.81% 57.10%
Advertising Expenses 6.14% 6.05% 2.77% 0.40%
Profit Before Interest and Taxes 16.60% 67.00% 81.61% 2.00%
Main Ratios
Current 7.93 11.45 19.53 1.37
Quick 7.93 11.45 19.53 1.12
Total Debt to Total Assets 6.07% 6.47% 3.70% 53.90%
Pre-tax Return on Net Worth 20.03% 120.13% 101.01% 6.90%
Pre-tax Return on Assets 18.81% 112.35% 97.27% 15.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 12.64% 50.25% 60.87% n.a
Return on Equity 15.25% 90.09% 75.33% n.a
Activity Ratios
Accounts Receivable Turnover 5.21 5.21 5.21 n.a
Collection Days 57 37 48 n.a
Accounts Payable Turnover 11.71 12.17 12.17 n.a
Payment Days 27 16 22 n.a
Total Asset Turnover 1.13 1.68 1.19 n.a
Debt Ratios
Debt to Net Worth 0.06 0.07 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $399,235 $6,501,984 $25,969,645 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.88 0.60 0.84 n.a
Current Debt/Total Assets 6% 6% 4% n.a
Acid Test 4.35 6.47 13.35 n.a
Sales/Net Worth 1.21 1.79 1.24 n.a
Dividend Payout 0.00 0.00 0.00 n.a