(Solution)-Financial Plan - Hill Country Home Health Care

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Financial Plan Financing Requirements Hill Country Home Health Care is also requesting a loan amortization over 10 years with a local bank in San Antonio, Texas to cover the remaining part of startup costs and working capital needs. The debt would be secured with all business assets, including receivables, and office equipment. To assist with first year cash flow, the loan will be structured as interest only for the first one year is paid at year end. While these repayment structures do not affect the profitability of the business significantly, some of the more relaxed terms allow for a larger cash reserve to cover unforeseeable operating expenses. Source of funds In order for Hill country Home Health Care agency to become a reality, a combination of personal investment and long term financing is needed. The owners will contribute $100,000 of investment and the remaining $200,000 will be financed by a long-term debt from a local bank. Use of funds There will be equipment, supplies, and deposits necessary to start operations. These are subject to change but representational of the items needed to begin serving clients. Item $ Computer Desktops 5,000 Copier 2,000 Phone System 5,000 Laser Printer 2,000 Uniforms or badges 7,000 Marketing/advertising budget 40,000 Office supplies 10,000 Medical supplies 40,000 Legal/Bank fees 10,000 Lease/Rent Deposit 10,000 Company vehicles 50,000 Insurance premiums 15,000 Workers Comp. Deposit 22,000 Miscellaneous 20,000 Total estimated startup cost $300,000 Financial Projections A five year projection of the financial operations of the home care business is below. The financial projections are based on several assumptions. Pro forma Income Statement Revenues COGS Gross margin Gross margin % Operating expenses Operating margin Operating margin % Interest expense Income before tax Income tax Net income Net profit margin Y1 $55,000 0 55,000 100% 81,000 Y2 $73,000 0 73,000 100% 103,000 Y3 $135,000 0 135,000 100% 110,000 Y4 $189,000 0 189,000 100% 127,000 Y5 $225,000 0 225,000 100% 138,000 (26,000) -47% (30,000) -43% 25,000 19% 62,000 33% 87,000 39% 10,000 -36,000 0 -36,000 -65$ 10,100 -40,100 0 -40,100 -55% 10,500 14,500 435 14,065 10% 9,450 52,550 15,560 36,785 19% 9,850 77,150 23,145 54,005 24% Assumptions The revenue forecasts are entirely based on average levels of startup businesses seen in the last three years. This is a conservative projection as the probability to grow is far bigger and level of competition is by far less. Pro forma Cash flow Statement Calendar year is the same as business year Net Profit Y1 -$36,000 Y2 -$40,100 Y3 $14,065 Y4 $36,785 Y5 $54,005 Depreciation and Amortization Change in accounts receivable Change in accounts payable Net cash flows from operations Investing & Financing activities Assets purchased Change in long-term debt Net cash flows from investing and financing activities Cash at the beginning of the period Net change in cash during the period Cash at the end of the period 2,000 (40,000) 6,000 (68,000) 2,000 (20,000) 4,000 (54,100) 2,000 (23,000) 3,000 (3,935) 2,000 (45,000) 5,000 (1,215) 2,000 (22,000) 9,000 43,005 (59,000) 200,000 141,000 0 0 (54,100) 0 0 (3,935) 0 0 (1,215) (10,000) 0 33,005 0 73,000 18,900 14,965 13,750 73,000 (54,100) (3,935) (1,215) 33,005 73,000 18,900 14,965 13,750 46,755 Cash flow Assumptions About 90% of sales are on credit. The remaining 10% is cash received beforehand. 40% of costs will be paid 1 month in arrears for items like medical supplies and office rent. Kindly give me a 5 slides summary power point presentation on the attached financial plan. I NEED A SUMMARY IN POWER POINT.

 

Solution ID:10086497 | Question answered on 16-Oct-2016

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