Medical Language Translation Business Plan

Global Health Translations

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.

Medical language translation business plan, financial plan chart image

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