figure 7.3

figure 7.4

figure 7.5

Utilizing Exhibit 7.3, 7.4, and 7.5 (Harrison, pp. 182-185): . Based on the three financial statements, what conclusions can you draw? What might be an area of focus in this company's strategic plan? What data can you use to support your conclusion? EXHIBIT 7.3 Pro Forma Physical Therapy Clinic An- nual Income Statement Projected Revenue and Expenses $384.155 -85,000 -9.750 -1.435 --5,000 Cost Center Revenue 1010 Physical Therapy Revenue Expenses 100 Salaries-General 1585 Fringe Benefits 3500 Med/Surg Supplies 3800 Marketing 4600 Office Supplies 4640 Postage/Shipping 4800 Minor Equipment 5550 Supplies and Materials 5630 Linen Expense 5640 Repairs and Maintenance 7030 Building Depreciation 7060 Equipment Depreciation 7600 Lease/Rent--Equipment 9100 Professional Dues Total Expenses -175 -134 -1,314 -1,306 -1,232 --366 -24.000 -1,612 -2,336 -495 -134.153 Net Income $250.000 EXHIBIT 7.4 Projected Physical Therapy Clinic Pay- back Periods Under Three Scenarios 4.80 4.60 4.40 Years 4.20 4.00 3.80 3 3.60 2 Scenario Year 3 Year 4 Year 5 Totals Scenario 1:100% of Projected Workload Sq. Ft. Year o Year 1 Year 2 Building costs ($750,000) $- $- $- $- $- Net income $- $250,000 $255,000 $260,100 $265.302 $270,608 Net cash flows (5750,000) $250,000 $255,000 $260,100 $265.302 $270,608 Cumulative payback $- $250,000 $505.000 $765,100 $1,030.402 $1,031,010 Cumulative cash flows (5750,000) ($500,000) ($245,000) $15,100 $280,402 $551,010 Payback period (years) = 3.96 NPV = $183,787 IRR = 21.3% (5750.000) $1,301,010 5551,010 Year 3 Year 4 Years Totals Scenario 2: 90% of Projected Workload Sq.Ft. Year o Year 1 Year 2 Building costs ($750,000) $- S- $- $- Net Income $ $225.000 $229.500 $234.090 $238.772 $243.547 Net cash flows ($750,000) $225.000 $229,500 $234.090 $238.772 $243.547 Cumulative payback $- $225,000 $454.500 $688.590 5927.362 $1,170,909 Cumulative cash flows (5750.000) ($525.000) ($295.500) ($61,410) $177.362 $420,909 Payback period (years) - 4.27 NPV = $90.409 IRR - 16.7% ($750,000) $1,170,909 $420,909 Year 2 Year 3 Year 5 $- $- Scenario 3: 80% of Projected Workload Sq. Ft. Year o Years Building costs ($750,000) $- Net income $- $200,000 Net cash flows ($750,000) $200,000 Cumulative payback $- $ 200,000 Cumulative cash flows ($750,000) ($550,000) $204.000 $204,000 $404.000 (5346,000) $208,080 $208.080 $612,080 Year 4 $- $317.242 $212,242 $824.322 574322 $- $216.486 $216,486 $1.040,808 $290,808 Totals (5750.000) $1.040,808 $290,808 (5137.920) Payback period (years) = 4.66 NPV = ($2.970) IRR - 11.8%