Medical Transcription Business Plan

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.

Medical transcription business plan, financial plan chart image

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