Question
M7 Project 1 Chang Dental Read the instructions and the attached Excel spreadsheet thoroughly before starting the project! Objectives : 1. Perform a qualitative analysis
M7 Project 1
Chang Dental
Read the instructions and the attached Excel spreadsheet thoroughly before starting the project!
Objectives:
1. Perform a qualitative analysis on a capital budgeting project.
2. Perform a valuation analysis on an existing business.
3. Perform scenario analysis (that makes business sense!)
Tasks:
1. Discuss the risks and rewards of investing in Chang Dental from Chris Millers perspective using a SWOT analysis.
2. Discuss the base case valuation provided to you.
3. Run scenario analyses on key variables using information from the case.
4. Make your final recommendation on whether or not Chris Miller should buy Chang Dental.
Tips:
Task 1: Use the information given in the case, but dont be afraid to include your own experiences with dentists in your analysis.
Task 2: Use the Excel file posted. In sheets "Exh1" and "Exh2" are the financial statement data. In sheet "Base_Case" is the completed base case valuation forecast. M7_Project_1_Class.xlsxDownload M7_Project_1_Class.xlsx
Task 3: Use the case as a guide for scenarios. Do not just randomly make scenarios. Submission Instructions:You should submit your completed work in a Word document and Excel file. M7 Project 1. class. xlsx
Chang Dental Clinic
Exhibit 1
INCOME STATEMENTS For the year ended December 31
2005. 2004. 2003. 2005. 2004. 2003
FEE REVENUE. $812,987 $600,308. $287,281 g. 35.4% 109.0%
OPERATING EXPENSES:
Associate fees 166,727 106,486. 40,098. 0.205 0.177. 0.140
Salaries and benefits 127,703. 93,868. 39,008.
Dental supplies. 62,715. 40,508 26,291 0.077. 0.067. 0.092
Equipment leasing. 52,582. 52,582 19,456 $387,00810-yearcapital of leases
Rent and utilities. 42,441. 38,500. 29,428
Laboratory fees. 21,626 10,636 186 0.027. 0.018. 0.001
General and Office 17,420 14,193 9,051
Promotion and Entertainment. 10,775 8,172 794
Automobile expenses. 5,104. 3,677. 1,337
Telephone 11,187 1,251. 4,697
Professional fees. 5,910 3,294. 5,755
Interest and bank charge. 5,630. 7,015. 13,579
Professional development. 2,913. 406 2,021
Insurance 2,778. 1,612. 849
Licenses, fees and dues. 1,843. 2,685. 1,282
Bed debts (recovered). (3,647) 17,939 339
Amortization. 14,872 10,484 8,687. 0.309. 0.263 0.232 v
TOTAL EXPENSES 548,579 413,308 202,858 368,074 F includes draw
NET INCOME. $264,408. $187,000. $84,423
Cash operating costs $191,324. $116,919. $42,701
Chang Dental Clinic
Exhibit 2
BALANCE SHEET As of December 31
2005 2004. 2003
ASSETS Current assets.
Cash. $4,067. $. $
Accounts receivable 46,942 41,248. 29,528. 0.058 0.069. 0.103
Inventory. 6,366. 5,296 2,677 0.008. 0.009. 0.009
Prepaid expenses 1,646. - - --
Total Current Assets. 59,021 46,544. 32,205
Long-term Assets
Fixed assets. $69,834. $60,625. $36,408 9209 24217
Less: Accumulated amortization.
fixed assets. (30,595). (19,171) (8,687)
Net fixed assets 39,239. 41,454. 27,721
0.022 c-factor Goodwill 1 1 1
Total Long-term Assets 39,240. 41,455 27,722
TOTAL ASSETS $98,261. $87,999 $59,927
LIABILITIES AND OWNER'S EQUITY
Liabilities Bank indebtedness $ $39. $8,201
Accounts payable 10,929 10,724 8,173. 0.013. 0.018. 0.028
Total Liabilities 10,929 10,763 16,374. 0.052. 0.060 0.084 w-factor
OWNER'S EQUITY S.
Chang, Capital. 87,332. 77,236. 43,553
TOTAL LIABILITIES AND
OWNER'S EQUITY $98,261. $87,999. $59,927
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