Occupational Health Business Plan

Workwell

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Financial Plan

The following sections outline the financial plan for Workwell.

7.1 Break-even Analysis

The following table and chart summarize our break-even analysis.

Break-even Analysis
Monthly Revenue Break-even $45,465
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $45,465

7.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. From the beginning, it has been recognized that collection days days are critical, but not a factor that is influenced easily. This is an element that needs to be recognized and dealt with accordingly. Interest rates, tax rates, and personnel burden are based on conservative assumptions.

General Assumptions
1999 2000 2001
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 25.00% 25.00% 25.42%
Other 0 0 0

7.3 Key Financial Indicators

The following chart shows the planned benchmarks for Workwell.

7.4 Projected Surplus or Deficit

Our projected surplus and deficit is shown on the following table, with net surpus increasing over the next three years. This is achievable through a reorganization of the current personnel structure, leadership accountability, increase in productivity (from 3.2 to 4.3 visits/hr), accurate coding and billing process, formal marketing effort, and introduction of new products/services.

Surplus and Deficit
1999 2000 2001
Funding $832,369 $974,374 $1,066,778
Direct Cost $0 $0 $0
Other $0 $0 $0
Total Direct Cost $0 $0 $0
Gross Surplus $832,369 $974,374 $1,066,778
Gross Surplus % 100.00% 100.00% 100.00%
Expenses
Payroll $140,118 $157,192 $161,925
Sales and Marketing and Other Expenses $293,748 $265,075 $273,550
Depreciation $11,340 $10,940 $10,540
Utilities $12,348 $12,700 $13,050
Rent $60,000 $60,000 $60,000
Payroll Taxes $28,024 $31,438 $32,385
Other $0 $0 $0
Total Operating Expenses $545,578 $537,345 $551,450
Surplus Before Interest and Taxes $286,791 $437,029 $515,328
EBITDA $298,131 $447,969 $525,868
Interest Expense $80,169 $57,807 $34,473
Taxes Incurred $51,656 $94,805 $122,217
Net Surplus $154,967 $284,416 $358,638
Net Surplus/Funding 18.62% 29.19% 33.62%

7.5 Projected Cash Flow

The following chart and table are the projected cash flow figures for Workwell.

Pro Forma Cash Flow
1999 2000 2001
Cash Received
Cash from Operations
Cash Funding $208,092 $243,594 $266,695
Cash from Receivables $661,326 $711,808 $787,738
Subtotal Cash from Operations $869,419 $955,402 $1,054,433
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 $869,419 $955,402 $1,054,433
Expenditures 1999 2000 2001
Expenditures from Operations
Cash Spending $140,118 $157,192 $161,925
Bill Payments $493,932 $519,984 $534,537
Subtotal Spent on Operations $634,050 $677,176 $696,462
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $204,000 $204,000 $204,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $29,340 $29,340 $29,340
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $867,390 $910,516 $929,802
Net Cash Flow $2,028 $44,886 $124,631
Cash Balance $10,465 $55,351 $179,982

7.6 Projected Balance Sheet

The projected balance sheet is included below.

Pro Forma Balance Sheet
1999 2000 2001
Assets
Current Assets
Cash $10,465 $55,351 $179,982
Accounts Receivable $111,205 $130,178 $142,523
Other Current Assets $184,531 $184,531 $184,531
Total Current Assets $306,202 $370,060 $507,036
Long-term Assets
Long-term Assets $120,579 $120,579 $120,579
Accumulated Depreciation $72,100 $83,040 $93,580
Total Long-term Assets $48,479 $37,539 $26,999
Total Assets $354,681 $407,599 $534,035
Liabilities and Capital 1999 2000 2001
Current Liabilities
Accounts Payable $41,048 $42,890 $44,028
Current Borrowing $430,601 $226,601 $22,601
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $471,649 $269,491 $66,629
Long-term Liabilities $264,140 $234,800 $205,460
Total Liabilities $735,789 $504,291 $272,089
Paid-in Capital $293,480 $293,480 $293,480
Accumulated Surplus/Deficit ($829,555) ($674,588) ($390,172)
Surplus/Deficit $154,967 $284,416 $358,638
Total Capital ($381,108) ($96,692) $261,946
Total Liabilities and Capital $354,681 $407,599 $534,035
Net Worth ($381,108) ($96,692) $261,946

7.7 Business Ratios

The following table outlines some of the more important ratios from the {Health and Allied Services, nec} industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8099.

Ratio Analysis
1999 2000 2001 Industry Profile
Funding Growth 49.71% 17.06% 9.48% 6.10%
Percent of Total Assets
Accounts Receivable 31.35% 31.94% 26.69% 26.30%
Other Current Assets 52.03% 45.27% 34.55% 51.30%
Total Current Assets 86.33% 90.79% 94.94% 78.90%
Long-term Assets 13.67% 9.21% 5.06% 21.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 132.98% 66.12% 12.48% 44.70%
Long-term Liabilities 74.47% 57.61% 38.47% 14.60%
Total Liabilities 207.45% 123.72% 50.95% 59.30%
Net Worth -107.45% -23.72% 49.05% 40.70%
Percent of Funding
Funding 100.00% 100.00% 100.00% 100.00%
Gross Surplus 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 82.52% 73.50% 70.29% 79.90%
Advertising Expenses 20.02% 13.56% 12.76% 1.30%
Surplus Before Interest and Taxes 34.45% 44.85% 48.31% 3.50%
Main Ratios
Current 0.65 1.37 7.61 1.46
Quick 0.65 1.37 7.61 1.22
Total Debt to Total Assets 207.45% 123.72% 50.95% 59.30%
Pre-tax Return on Net Worth -54.22% -392.20% 183.57% 4.40%
Pre-tax Return on Assets 58.26% 93.04% 90.04% 10.80%
Additional Ratios 1999 2000 2001
Net Surplus Margin 18.62% 29.19% 33.62% n.a
Return on Equity 0.00% 0.00% 136.91% n.a
Activity Ratios
Accounts Receivable Turnover 5.61 5.61 5.61 n.a
Collection Days 61 60 62 n.a
Accounts Payable Turnover 12.81 12.17 12.17 n.a
Payment Days 28 29 30 n.a
Total Asset Turnover 2.35 2.39 2.00 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 1.04 n.a
Current Liab. to Liab. 0.64 0.53 0.24 n.a
Liquidity Ratios
Net Working Capital ($165,447) $100,569 $440,407 n.a
Interest Coverage 3.58 7.56 14.95 n.a
Additional Ratios
Assets to Funding 0.43 0.42 0.50 n.a
Current Debt/Total Assets 133% 66% 12% n.a
Acid Test 0.41 0.89 5.47 n.a
Funding/Net Worth 0.00 0.00 4.07 n.a
Dividend Payout 0.00 0.00 0.00 n.a
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Break-even Analysis
Monthly Revenue Break-even $45,465
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $45,465
General Assumptions
1999 2000 2001
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 25.00% 25.00% 25.42%
Other 0 0 0
Surplus and Deficit
1999 2000 2001
Funding $832,369 $974,374 $1,066,778
Direct Cost $0 $0 $0
Other $0 $0 $0
Total Direct Cost $0 $0 $0
Gross Surplus $832,369 $974,374 $1,066,778
Gross Surplus % 100.00% 100.00% 100.00%
Expenses
Payroll $140,118 $157,192 $161,925
Sales and Marketing and Other Expenses $293,748 $265,075 $273,550
Depreciation $11,340 $10,940 $10,540
Utilities $12,348 $12,700 $13,050
Rent $60,000 $60,000 $60,000
Payroll Taxes $28,024 $31,438 $32,385
Other $0 $0 $0
Total Operating Expenses $545,578 $537,345 $551,450
Surplus Before Interest and Taxes $286,791 $437,029 $515,328
EBITDA $298,131 $447,969 $525,868
Interest Expense $80,169 $57,807 $34,473
Taxes Incurred $51,656 $94,805 $122,217
Net Surplus $154,967 $284,416 $358,638
Net Surplus/Funding 18.62% 29.19% 33.62%
Pro Forma Cash Flow
1999 2000 2001
Cash Received
Cash from Operations
Cash Funding $208,092 $243,594 $266,695
Cash from Receivables $661,326 $711,808 $787,738
Subtotal Cash from Operations $869,419 $955,402 $1,054,433
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 $869,419 $955,402 $1,054,433
Expenditures 1999 2000 2001
Expenditures from Operations
Cash Spending $140,118 $157,192 $161,925
Bill Payments $493,932 $519,984 $534,537
Subtotal Spent on Operations $634,050 $677,176 $696,462
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $204,000 $204,000 $204,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $29,340 $29,340 $29,340
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $867,390 $910,516 $929,802
Net Cash Flow $2,028 $44,886 $124,631
Cash Balance $10,465 $55,351 $179,982
Pro Forma Balance Sheet
1999 2000 2001
Assets
Current Assets
Cash $10,465 $55,351 $179,982
Accounts Receivable $111,205 $130,178 $142,523
Other Current Assets $184,531 $184,531 $184,531
Total Current Assets $306,202 $370,060 $507,036
Long-term Assets
Long-term Assets $120,579 $120,579 $120,579
Accumulated Depreciation $72,100 $83,040 $93,580
Total Long-term Assets $48,479 $37,539 $26,999
Total Assets $354,681 $407,599 $534,035
Liabilities and Capital 1999 2000 2001
Current Liabilities
Accounts Payable $41,048 $42,890 $44,028
Current Borrowing $430,601 $226,601 $22,601
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $471,649 $269,491 $66,629
Long-term Liabilities $264,140 $234,800 $205,460
Total Liabilities $735,789 $504,291 $272,089
Paid-in Capital $293,480 $293,480 $293,480
Accumulated Surplus/Deficit ($829,555) ($674,588) ($390,172)
Surplus/Deficit $154,967 $284,416 $358,638
Total Capital ($381,108) ($96,692) $261,946
Total Liabilities and Capital $354,681 $407,599 $534,035
Net Worth ($381,108) ($96,692) $261,946
Ratio Analysis
1999 2000 2001 Industry Profile
Funding Growth 49.71% 17.06% 9.48% 6.10%
Percent of Total Assets
Accounts Receivable 31.35% 31.94% 26.69% 26.30%
Other Current Assets 52.03% 45.27% 34.55% 51.30%
Total Current Assets 86.33% 90.79% 94.94% 78.90%
Long-term Assets 13.67% 9.21% 5.06% 21.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 132.98% 66.12% 12.48% 44.70%
Long-term Liabilities 74.47% 57.61% 38.47% 14.60%
Total Liabilities 207.45% 123.72% 50.95% 59.30%
Net Worth -107.45% -23.72% 49.05% 40.70%
Percent of Funding
Funding 100.00% 100.00% 100.00% 100.00%
Gross Surplus 100.00% 100.00% 100.00% 0.00%
Selling, General & Administrative Expenses 82.52% 73.50% 70.29% 79.90%
Advertising Expenses 20.02% 13.56% 12.76% 1.30%
Surplus Before Interest and Taxes 34.45% 44.85% 48.31% 3.50%
Main Ratios
Current 0.65 1.37 7.61 1.46
Quick 0.65 1.37 7.61 1.22
Total Debt to Total Assets 207.45% 123.72% 50.95% 59.30%
Pre-tax Return on Net Worth -54.22% -392.20% 183.57% 4.40%
Pre-tax Return on Assets 58.26% 93.04% 90.04% 10.80%
Additional Ratios 1999 2000 2001
Net Surplus Margin 18.62% 29.19% 33.62% n.a
Return on Equity 0.00% 0.00% 136.91% n.a
Activity Ratios
Accounts Receivable Turnover 5.61 5.61 5.61 n.a
Collection Days 61 60 62 n.a
Accounts Payable Turnover 12.81 12.17 12.17 n.a
Payment Days 28 29 30 n.a
Total Asset Turnover 2.35 2.39 2.00 n.a
Debt Ratios
Debt to Net Worth 0.00 0.00 1.04 n.a
Current Liab. to Liab. 0.64 0.53 0.24 n.a
Liquidity Ratios
Net Working Capital ($165,447) $100,569 $440,407 n.a
Interest Coverage 3.58 7.56 14.95 n.a
Additional Ratios
Assets to Funding 0.43 0.42 0.50 n.a
Current Debt/Total Assets 133% 66% 12% n.a
Acid Test 0.41 0.89 5.47 n.a
Funding/Net Worth 0.00 0.00 4.07 n.a
Dividend Payout 0.00 0.00 0.00 n.a