Elite Medical Transcription

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Medical Transcription Business Plan

Financial Plan

The following subtopics will provide more financial information.

7.1 Important Assumptions

See the following table for 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 25.42% 25.00% 25.42%
Other 0 0 0

7.2 Break-even Analysis

The Break-even Analysis is shown below.

Break-even Analysis
Monthly Revenue Break-even $7,308
Assumptions:
Average Percent Variable Cost 10%
Estimated Monthly Fixed Cost $6,577

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 $79,245 $144,003 $164,796
Direct Cost of Sales $7,925 $14,400 $16,480
Other $0 $0 $0
Total Cost of Sales $7,925 $14,400 $16,480
Gross Margin $71,321 $129,603 $148,316
Gross Margin % 90.00% 90.00% 90.00%
Expenses
Payroll $63,300 $86,400 $82,000
Sales and Marketing and Other Expenses $1,620 $1,620 $1,620
Depreciation $1,812 $1,812 $1,812
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
Insurance $1,200 $1,200 $1,200
Rent $0 $0 $0
Payroll Taxes $9,495 $12,960 $12,300
Other $0 $0 $0
Total Operating Expenses $78,927 $105,492 $100,432
Profit Before Interest and Taxes ($7,607) $24,111 $47,884
EBITDA ($5,795) $25,923 $49,696
Interest Expense $0 $0 $0
Taxes Incurred $0 $6,028 $12,171
Net Profit ($7,606) $18,083 $35,714
Net Profit/Sales -9.60% 12.56% 21.67%

7.4 Projected Cash Flow

The following table will indicate Projected Cash Flow.

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $35,660 $64,801 $74,158
Cash from Receivables $29,606 $67,779 $86,970
Subtotal Cash from Operations $65,267 $132,580 $161,128
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 $65,267 $132,580 $161,128
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $63,300 $86,400 $82,000
Bill Payments $19,034 $37,314 $44,649
Subtotal Spent on Operations $82,334 $123,714 $126,649
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 $82,334 $123,714 $126,649
Net Cash Flow ($17,067) $8,866 $34,480
Cash Balance $7,083 $15,949 $50,428

7.5 Projected Balance Sheet

The following table details the Projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $7,083 $15,949 $50,428
Accounts Receivable $13,978 $25,401 $29,069
Other Current Assets $0 $0 $0
Total Current Assets $21,061 $41,350 $79,497
Long-term Assets
Long-term Assets $5,450 $5,450 $5,450
Accumulated Depreciation $1,812 $3,624 $5,436
Total Long-term Assets $3,638 $1,826 $14
Total Assets $24,699 $43,176 $79,511
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,706 $3,099 $3,721
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,706 $3,099 $3,721
Long-term Liabilities $0 $0 $0
Total Liabilities $2,706 $3,099 $3,721
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings ($400) ($8,006) $10,077
Earnings ($7,606) $18,083 $35,714
Total Capital $21,994 $40,077 $75,790
Total Liabilities and Capital $24,699 $43,176 $79,511
Net Worth $21,994 $40,077 $75,790

7.6 Business Ratios

The following table contains important ratios from the medical and hospital equipment industry,as determined by the Standard Industry Classification (SIC) Index.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 81.72% 14.44% 5.80%
Percent of Total Assets
Accounts Receivable 56.59% 58.83% 36.56% 28.90%
Other Current Assets 0.00% 0.00% 0.00% 22.00%
Total Current Assets 85.27% 95.77% 99.98% 86.20%
Long-term Assets 14.73% 4.23% 0.02% 13.80%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 10.95% 7.18% 4.68% 43.90%
Long-term Liabilities 0.00% 0.00% 0.00% 10.10%
Total Liabilities 10.95% 7.18% 4.68% 54.00%
Net Worth 89.05% 92.82% 95.32% 46.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 90.00% 90.00% 90.00% 28.30%
Selling, General & Administrative Expenses 99.60% 77.44% 68.21% 16.20%
Advertising Expenses 2.04% 1.12% 0.98% 0.90%
Profit Before Interest and Taxes -9.60% 16.74% 29.06% 3.40%
Main Ratios
Current 7.78 13.34 21.37 1.93
Quick 7.78 13.34 21.37 0.91
Total Debt to Total Assets 10.95% 7.18% 4.68% 54.00%
Pre-tax Return on Net Worth -34.59% 60.16% 63.18% 6.20%
Pre-tax Return on Assets -30.80% 55.84% 60.22% 13.50%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.60% 12.56% 21.67% n.a
Return on Equity -34.59% 45.12% 47.12% n.a
Activity Ratios
Accounts Receivable Turnover 3.12 3.12 3.12 n.a
Collection Days 55 91 110 n.a
Accounts Payable Turnover 8.03 12.17 12.17 n.a
Payment Days 27 28 27 n.a
Total Asset Turnover 3.21 3.34 2.07 n.a
Debt Ratios
Debt to Net Worth 0.12 0.08 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $18,356 $38,251 $75,776 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.31 0.30 0.48 n.a
Current Debt/Total Assets 11% 7% 5% n.a
Acid Test 2.62 5.15 13.55 n.a
Sales/Net Worth 3.60 3.59 2.17 n.a
Dividend Payout 0.00 0.00 0.00 n.a