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 |
