Elite Medical Transcription
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 |