Southwest Veterinary Clinic

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Veterinary Clinic Business Plan

Financial Plan

The following is the financial plan for Southwest Veterinary Clinic.

7.1 Break-even Analysis

The monthly break-even point is $30,000.

Break-even Analysis
Monthly Revenue Break-even $28,351
Assumptions:
Average Percent Variable Cost 24%
Estimated Monthly Fixed Cost $21,641

7.2 Projected Profit and Loss

The following is the projected profit and loss for three years.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $417,000 $450,000 $490,000
Direct Cost of Sales $98,700 $110,000 $120,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $98,700 $110,000 $120,000
Gross Margin $318,300 $340,000 $370,000
Gross Margin % 76.33% 75.56% 75.51%
Expenses
Payroll $168,000 $183,000 $198,000
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $11,424 $11,424 $11,424
Leased Equipment $0 $0 $0
Utilities $3,600 $3,600 $3,600
Insurance $7,200 $7,200 $7,200
Rent $36,000 $36,000 $36,000
Payroll Taxes $27,465 $30,300 $32,400
Other $0 $0 $0
Total Operating Expenses $259,689 $277,524 $294,624
Profit Before Interest and Taxes $58,611 $62,476 $75,376
EBITDA $70,035 $73,900 $86,800
Interest Expense $14,242 $12,901 $11,502
Taxes Incurred $13,311 $14,872 $19,162
Net Profit $31,058 $34,702 $44,712
Net Profit/Sales 7.45% 7.71% 9.12%

7.3 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 $417,000 $450,000 $490,000
Subtotal Cash from Operations $417,000 $450,000 $490,000
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 $417,000 $450,000 $490,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $168,000 $183,000 $198,000
Bill Payments $181,390 $227,847 $234,632
Subtotal Spent on Operations $349,390 $410,847 $432,632
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 $13,992 $13,992 $13,992
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $363,382 $424,839 $446,624
Net Cash Flow $53,618 $25,161 $43,376
Cash Balance $78,618 $103,779 $147,154

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 $78,618 $103,779 $147,154
Other Current Assets $0 $0 $0
Total Current Assets $78,618 $103,779 $147,154
Long-term Assets
Long-term Assets $110,000 $110,000 $110,000
Accumulated Depreciation $11,424 $22,848 $34,272
Total Long-term Assets $98,576 $87,152 $75,728
Total Assets $177,194 $190,931 $222,882
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $25,128 $18,154 $19,386
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $25,128 $18,154 $19,386
Long-term Liabilities $136,008 $122,016 $108,024
Total Liabilities $161,136 $140,170 $127,410
Paid-in Capital $80,000 $80,000 $80,000
Retained Earnings ($95,000) ($63,942) ($29,239)
Earnings $31,058 $34,702 $44,712
Total Capital $16,058 $50,761 $95,472
Total Liabilities and Capital $177,194 $190,931 $222,882
Net Worth $16,058 $50,761 $95,472

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 0742, Veterinary Services, are shown for comparison.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 7.91% 8.89% -2.90%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 32.60%
Total Current Assets 44.37% 54.35% 66.02% 59.90%
Long-term Assets 55.63% 45.65% 33.98% 40.10%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.18% 9.51% 8.70% 31.10%
Long-term Liabilities 76.76% 63.91% 48.47% 21.50%
Total Liabilities 90.94% 73.41% 57.16% 52.60%
Net Worth 9.06% 26.59% 42.84% 47.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 76.33% 75.56% 75.51% 40.00%
Selling, General & Administrative Expenses 71.42% 70.80% 68.96% 23.70%
Advertising Expenses 1.44% 1.33% 1.22% 0.50%
Profit Before Interest and Taxes 14.06% 13.88% 15.38% 3.60%
Main Ratios
Current 3.13 5.72 7.59 1.95
Quick 3.13 5.72 7.59 1.26
Total Debt to Total Assets 90.94% 73.41% 57.16% 52.60%
Pre-tax Return on Net Worth 276.30% 97.66% 66.90% 5.50%
Pre-tax Return on Assets 25.04% 25.96% 28.66% 11.60%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 7.45% 7.71% 9.12% n.a
Return on Equity 193.41% 68.36% 46.83% n.a
Activity Ratios
Accounts Payable Turnover 8.22 12.17 12.17 n.a
Payment Days 27 36 29 n.a
Total Asset Turnover 2.35 2.36 2.20 n.a
Debt Ratios
Debt to Net Worth 10.03 2.76 1.33 n.a
Current Liab. to Liab. 0.16 0.13 0.15 n.a
Liquidity Ratios
Net Working Capital $53,490 $85,625 $127,768 n.a
Interest Coverage 4.12 4.84 6.55 n.a
Additional Ratios
Assets to Sales 0.42 0.42 0.45 n.a
Current Debt/Total Assets 14% 10% 9% n.a
Acid Test 3.13 5.72 7.59 n.a
Sales/Net Worth 25.97 8.87 5.13 n.a
Dividend Payout 0.00 0.00 0.00 n.a