The Rosemont Clinic (TRC), has been providing medical services to the population since 2018 (public care). They are a relatively new clinic. TRC owns the four-story building where they operate and uses one of the floors. Another floor is used by its subsidiary company for which they have 100% ownership. They have additional space on the remaining two (2) floors that they rent to a total of five (5) tenants.

Recharges

There are expenses that TRC have assumed for the tenants and want to recharge these costs to them going forward, cost that TRC have assumed since its creation and ownership of the building. A total amount of 28 901$ for 2022 is expected to be recharged to the 5 tenants on a total cost of 57 802$, based on their percentage (%) of occupation of the building (50%). Their % of occupation of these 2 floors and their yearly rent (paid monthly) is detailed as follow:

Tenants % of occupation yearly rent($)

1 38.7 41,991

2 8.6 54,000

3 22.1 18,155

4 22.6 28,090

5 8.0 26,000

100%

TRC created a subsidiary company, Mega Care (MC) who specialize in private health care, for which they are the unique shareholder, as mentioned. MC is the 6^th tenant and uses the 4^th floor for its operations (yearly rent of 180 000$, paid monthly). There are no recharges for MC.

Grants:

As public health care service provider, TRC receives public funding from the provincial government:

5 000$ per practician hired, per month;

An additional amount based on the number of patients files opened each month.

It is expected that TRC will start 2022 with 9 hired practician and hire additional practicians in 2022: one in February, 3 in April, one in August and one in November, ending 2022 with 17 hired practicians.

The following table details the additional monthly amount received based on the number of files opened:

Number of files opened Monthly amount granted

Less than 100 16,873

Between 100 and 500 19,477

More than 500 25,720

From January to September, TRC's number of patients opened files is expected to vary between 100 and 500. Expectations for the last quarter of 2022 are between 100 and 500 files opened.

ASSIGNMENT #2

Additional grants

I order to prepare for the expected increase of patient files in May, TRC will apply for an additional grant from the provincial government (focused on employability) to cover part of the administrative assistant 30 000$ yearly salary. The grant would cover 42% of it and would be paid from April to September inclusively.

A special grant of 25 000$ will be attributed to TRC in July 2022 for providing pharmacy services through its subsidiary MC. A special program from the federal government will reimburse 640$ per month for 2022 on their medical equipment as well.

Medical equipment

TRC leases its medical equipment from an external provider. The leases are each over a period of 5 years and will each end in 2023. A total amount of 307 315$ is paid yearly on the leases. They are lease-to-purchase agreements with the option to purchase the equipment before the leases expire.

General and administrative expenses

For 2022, the general and administrative expense are detailed as follow:

General and Administrative A/C Yearly expense amount

Taxes, permits and license 57,829

Insurances 9,600

Telecommunications 10,128

Office furniture 9,840

meal and entertainment 1,200

Repairs and maintenance 20 160

Marketing and promotion 10 560

Professional fees 9 600

Bank fees 1 764

Management and fees 427 320

Salaries and remittance 537 843

Total $ 1 095 844

REQUIRED:

1.Draft a monthly cash flow forecast for 2022 and determine whether or not TRC will have positive cash flows from its operation for 2022.

2.If your forecast shows a deficit for a month or several months, recommend and describe a form of credit available that would help cover the monthly deficit(s). Explain your recommendation.

If TRC decides to purchase the medical equipment, what type of credit would you recommend for the purchase if their total residual value is 250 000$. The credit length would be over a period of 3 years.