Workwell
Financial Plan
The following sections outline the financial plan for Workwell.
7.1 Break-even Analysis
The following table and chart summarize our break-even analysis.
| Break-even Analysis | |
| Monthly Revenue Break-even | $45,465 |
| Assumptions: | |
| Average Percent Variable Cost | 0% |
| Estimated Monthly Fixed Cost | $45,465 |
7.2 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. From the beginning, it has been recognized that collection days days are critical, but not a factor that is influenced easily. This is an element that needs to be recognized and dealt with accordingly. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
| General Assumptions | |||
| 1999 | 2000 | 2001 | |
| 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 | 25.00% | 25.00% | 25.42% |
| Other | 0 | 0 | 0 |
7.3 Key Financial Indicators
The following chart shows the planned benchmarks for Workwell.
7.4 Projected Surplus or Deficit
Our projected surplus and deficit is shown on the following table, with net surpus increasing over the next three years. This is achievable through a reorganization of the current personnel structure, leadership accountability, increase in productivity (from 3.2 to 4.3 visits/hr), accurate coding and billing process, formal marketing effort, and introduction of new products/services.
| Surplus and Deficit | |||
| 1999 | 2000 | 2001 | |
| Funding | $832,369 | $974,374 | $1,066,778 |
| Direct Cost | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| Total Direct Cost | $0 | $0 | $0 |
| Gross Surplus | $832,369 | $974,374 | $1,066,778 |
| Gross Surplus % | 100.00% | 100.00% | 100.00% |
| Expenses | |||
| Payroll | $140,118 | $157,192 | $161,925 |
| Sales and Marketing and Other Expenses | $293,748 | $265,075 | $273,550 |
| Depreciation | $11,340 | $10,940 | $10,540 |
| Utilities | $12,348 | $12,700 | $13,050 |
| Rent | $60,000 | $60,000 | $60,000 |
| Payroll Taxes | $28,024 | $31,438 | $32,385 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $545,578 | $537,345 | $551,450 |
| Surplus Before Interest and Taxes | $286,791 | $437,029 | $515,328 |
| EBITDA | $298,131 | $447,969 | $525,868 |
| Interest Expense | $80,169 | $57,807 | $34,473 |
| Taxes Incurred | $51,656 | $94,805 | $122,217 |
| Net Surplus | $154,967 | $284,416 | $358,638 |
| Net Surplus/Funding | 18.62% | 29.19% | 33.62% |
7.5 Projected Cash Flow
The following chart and table are the projected cash flow figures for Workwell.
| Pro Forma Cash Flow | |||
| 1999 | 2000 | 2001 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Funding | $208,092 | $243,594 | $266,695 |
| Cash from Receivables | $661,326 | $711,808 | $787,738 |
| Subtotal Cash from Operations | $869,419 | $955,402 | $1,054,433 |
| 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 | $869,419 | $955,402 | $1,054,433 |
| Expenditures | 1999 | 2000 | 2001 |
| Expenditures from Operations | |||
| Cash Spending | $140,118 | $157,192 | $161,925 |
| Bill Payments | $493,932 | $519,984 | $534,537 |
| Subtotal Spent on Operations | $634,050 | $677,176 | $696,462 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $204,000 | $204,000 | $204,000 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $29,340 | $29,340 | $29,340 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $867,390 | $910,516 | $929,802 |
| Net Cash Flow | $2,028 | $44,886 | $124,631 |
| Cash Balance | $10,465 | $55,351 | $179,982 |
7.6 Projected Balance Sheet
The projected balance sheet is included below.
| Pro Forma Balance Sheet | |||
| 1999 | 2000 | 2001 | |
| Assets | |||
| Current Assets | |||
| Cash | $10,465 | $55,351 | $179,982 |
| Accounts Receivable | $111,205 | $130,178 | $142,523 |
| Other Current Assets | $184,531 | $184,531 | $184,531 |
| Total Current Assets | $306,202 | $370,060 | $507,036 |
| Long-term Assets | |||
| Long-term Assets | $120,579 | $120,579 | $120,579 |
| Accumulated Depreciation | $72,100 | $83,040 | $93,580 |
| Total Long-term Assets | $48,479 | $37,539 | $26,999 |
| Total Assets | $354,681 | $407,599 | $534,035 |
| Liabilities and Capital | 1999 | 2000 | 2001 |
| Current Liabilities | |||
| Accounts Payable | $41,048 | $42,890 | $44,028 |
| Current Borrowing | $430,601 | $226,601 | $22,601 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $471,649 | $269,491 | $66,629 |
| Long-term Liabilities | $264,140 | $234,800 | $205,460 |
| Total Liabilities | $735,789 | $504,291 | $272,089 |
| Paid-in Capital | $293,480 | $293,480 | $293,480 |
| Accumulated Surplus/Deficit | ($829,555) | ($674,588) | ($390,172) |
| Surplus/Deficit | $154,967 | $284,416 | $358,638 |
| Total Capital | ($381,108) | ($96,692) | $261,946 |
| Total Liabilities and Capital | $354,681 | $407,599 | $534,035 |
| Net Worth | ($381,108) | ($96,692) | $261,946 |
7.7 Business Ratios
The following table outlines some of the more important ratios from the {Health and Allied Services, nec} industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8099.
| Ratio Analysis | ||||
| 1999 | 2000 | 2001 | Industry Profile | |
| Funding Growth | 49.71% | 17.06% | 9.48% | 6.10% |
| Percent of Total Assets | ||||
| Accounts Receivable | 31.35% | 31.94% | 26.69% | 26.30% |
| Other Current Assets | 52.03% | 45.27% | 34.55% | 51.30% |
| Total Current Assets | 86.33% | 90.79% | 94.94% | 78.90% |
| Long-term Assets | 13.67% | 9.21% | 5.06% | 21.10% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 132.98% | 66.12% | 12.48% | 44.70% |
| Long-term Liabilities | 74.47% | 57.61% | 38.47% | 14.60% |
| Total Liabilities | 207.45% | 123.72% | 50.95% | 59.30% |
| Net Worth | -107.45% | -23.72% | 49.05% | 40.70% |
| Percent of Funding | ||||
| Funding | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Surplus | 100.00% | 100.00% | 100.00% | 0.00% |
| Selling, General & Administrative Expenses | 82.52% | 73.50% | 70.29% | 79.90% |
| Advertising Expenses | 20.02% | 13.56% | 12.76% | 1.30% |
| Surplus Before Interest and Taxes | 34.45% | 44.85% | 48.31% | 3.50% |
| Main Ratios | ||||
| Current | 0.65 | 1.37 | 7.61 | 1.46 |
| Quick | 0.65 | 1.37 | 7.61 | 1.22 |
| Total Debt to Total Assets | 207.45% | 123.72% | 50.95% | 59.30% |
| Pre-tax Return on Net Worth | -54.22% | -392.20% | 183.57% | 4.40% |
| Pre-tax Return on Assets | 58.26% | 93.04% | 90.04% | 10.80% |
| Additional Ratios | 1999 | 2000 | 2001 | |
| Net Surplus Margin | 18.62% | 29.19% | 33.62% | n.a |
| Return on Equity | 0.00% | 0.00% | 136.91% | n.a |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 5.61 | 5.61 | 5.61 | n.a |
| Collection Days | 61 | 60 | 62 | n.a |
| Accounts Payable Turnover | 12.81 | 12.17 | 12.17 | n.a |
| Payment Days | 28 | 29 | 30 | n.a |
| Total Asset Turnover | 2.35 | 2.39 | 2.00 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 0.00 | 0.00 | 1.04 | n.a |
| Current Liab. to Liab. | 0.64 | 0.53 | 0.24 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | ($165,447) | $100,569 | $440,407 | n.a |
| Interest Coverage | 3.58 | 7.56 | 14.95 | n.a |
| Additional Ratios | ||||
| Assets to Funding | 0.43 | 0.42 | 0.50 | n.a |
| Current Debt/Total Assets | 133% | 66% | 12% | n.a |
| Acid Test | 0.41 | 0.89 | 5.47 | n.a |
| Funding/Net Worth | 0.00 | 0.00 | 4.07 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
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