Homework SoursePhysical Therapy Center Assignment The operation will receiv
Physical Therapy Center Assignment
The operation will receive an interest free, non-amortizing loan of $ 400,000 from the home office.
The pre-opening start up costs are $71,429 which will be “capitalized” (treated as P,P,& E).
The investment in property, plant and equipment (AKA technology) is $ 285,714 .
Assignment: Prepare the Cash Flow Proforma for 5 years based on the above assumptions and Proforma Results of Operations posted on Angel. What is the ending Cash balance?
| Outpatient Therapy Center | ||||||
| Financial Proforma-Years | ||||||
| Year | Year | Year | Year | Year | ||
| 1 | 2 | 3 | 4 | 5 | 5 Yr Total | |
| # OF VISITS | 2,268 | 2,940 | 3,533 | 3,974 | 4,783 | 17,498 |
| Revenue | ||||||
| Gross Revenue | 907,200 | 1,223,040 | 1,528,625 | 1,787,971 | 2,238,056 | 7,684,893 |
| Contractual Allowance | (544,320) | (726,486) | (898,694) | (1,040,114) | (1,287,900) | (4,497,514) |
| NET REVENUE | $362,880 | $496,554 | $629,931 | $747,857 | $950,157 | $3,187,379 |
| Direct Expenses | ||||||
| Rent | 96,000 | 98,000 | 100,000 | 102,000 | 104,000 | 500,000 |
| Common Area Maintenance Charges | 24,000 | 25,200 | 26,460 | 27,783 | 29,172 | 132,615 |
| Start Up Costs Depreciation | 7,143 | 14,286 | 14,286 | 14,286 | 14,286 | 64,286 |
| Technology Depreciation | 14,286 | 28,571 | 28,571 | 28,571 | 28,571 | 128,571 |
| Advertising | 12,000 | 1,500 | 1,500 | 1,500 | 1,500 | 18,000 |
| Salary | 248,976 | 298,954 | 335,884 | 342,884 | 383,631 | 1,610,330 |
| Benefits | 63,862 | 83,329 | 86,154 | 87,950 | 98,401 | 419,697 |
| Vacation Coverage | 2,160 | 2,246 | 2,336 | 2,430 | 2,527 | 11,699 |
| Extended Leave | 1,151 | 1,197 | 1,244 | 5,177 | 5,384 | 14,152 |
| Electric | 8,000 | 8,880 | 9,235 | 9,605 | 9,989 | 45,709 |
| Phone | 1,800 | 1,872 | 1,947 | 2,025 | 2,106 | 9,749 |
| Repairs & Maintenance | 500 | 1,000 | 2,000 | 4,000 | 8,000 | 15,500 |
| Total Direct Expenses | 479,877 | 565,035 | 609,619 | 628,210 | 687,567 | 2,970,308 |
| Indirect Expenses | ||||||
| Supplies | 454 | 588 | 707 | 795 | 957 | 3,500 |
| Laundry | 2,563 | 3,322 | 3,993 | 4,490 | 5,405 | 19,772 |
| Total Indirect Expenses | 3,016 | 3,910 | 4,699 | 5,285 | 6,361 | 23,272 |
| TOTAL EXPENSES | $482,894 | $568,946 | $614,318 | $633,495 | $693,928 | $2,993,580 |
| NET INCOME/LOSS | $(120,014) | $(72,391) | $15,613 | $114,362 | $256,229 | $193,799 |
| Income Percentage | -33.1% | -14.6% | 2.5% | 15.3% | 27.0% | 6.1% |
Solution
Note1: depreciation is excluded since it is a non-cash expenditure.
Note2: closing cash=opening cash + current year cash flow
| Year1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash inflow: | |||||
| Cash flow from loan | 400,000 | ||||
| revenue | 907,200 | 1,223,040 | 1,528,625 | 1,787,971 | 2,238,056 |
| Total cash inflow | 1,307,200 | 1,223,040 | 1,528,625 | 1,787,971 | 2,238,056 |
| Cash outflow: | |||||
| Start up cost | (71,429) | ||||
| Investment in property | (285,714) | ||||
| allowance | (544,320) | (726,486) | (898,694) | (1,040,114) | (1,287,900) |
| Rent | (96,000) | (98,000) | (100,000) | (102,000) | (104,000) |
| Maintenance charges | (24,000) | (25,200) | (26,460) | (27,783) | (29,172) |
| Advertising | (12,000) | (1,500) | (1,500) | (1,500) | (1,500) |
| salary | (248,976) | (298,954) | (335,884) | (342,884) | (383,631) |
| benefits | (63,862) | (83,329) | (86,154) | (87,950) | (98,401) |
| vacation coverage | (2,160) | (2,246) | (2,336) | (2,430) | (2,527) |
| extended leave | (1,151) | (1,197) | (1,244) | (5,177) | (5,384) |
| electric | (8,000) | (8,880) | (9,235) | (9,605) | (9,989) |
| phone | (1,800) | (1,872) | (1,947) | (2,025) | (2,106) |
| repairs | (500) | (1,000) | (2,000) | (4,000) | (8,000) |
| supplies | (454) | (588) | (707) | (795) | (957) |
| laundry | (2,563) | (3,322) | (3,993) | (4,490) | (5,405) |
| total cash outflow | (1,362,929) | (1,252,574) | (1,470,154) | (1,630,753) | (1,938,972) |
| Net cash flow (outflow) | (55,729) | (29,534) | 58,471 | 157,218 | 299,084 |
| opening cash | - | (55,729) | (29,534) | 58,471 | 157,218 |
| closing cash | (55,729) | (85,263) | 28,937 | 215,689 | 456,302 |
