Your friend, Mary Doe, is considering opening a Day Care Center. She has started compiling her assumptions and putting together an Income Statement. She has determined that she must make at least $75,000 profit per year in order to start the business. She has asked you to analyze her Income Statement and help her determine whether it is viable for her to start this business. She has completed her Income Statement and performed What-If analysis view potential profitability. What are you findings from this example? What are your recommendations? Overall, what do you conclude?

Day Care Wonders Income Statement Teacher:Student Ratio Required Students Teachers 1 1 7 2 13 3 19 4 Assumptions Number of Children/Day Average Days per Year Teacher Cost per Year Food per Child per Day . Supplies per Child per Year 1 2 Annual Revenue 3 Tuition per Day 1 Annual Revenue 7 250 26,000 1.3 75 Expenses Net Income Initial Values $79,213 $8,288 6 $52,825 $22,175 Effect of Varying Number of Children on Expenses and Net Income 7 8 9 10 11 12 $79,213 $79,600 $79,988 $80,375 $80,763 $81,150 $8,288 $20,400 $32,513 $44,625 $56,738 $68,850 13 $107,538 $54,963 14 $107,925 $67,075 15 $108,313 $79,188 501 87,500 $ 2,188 525 52,000 54,713 $10,013 $ Fees 35 40 45 co 50 55 60 65 70 75 Annual Variable Expenses 7 Food Expenses 3 Supplies per Year 3 Teacher Cost Total Variable Expenses 1 Annual Fixed Expenses 3 Insurance 1 Maintenance 5 Administrative & Advertising Est. Taxes Total Fixed Expenses 3 Summary Total Revenue 1. Total Expenses Net Income 3 4 5 6 $325 $7,175 $14,675 $22,175 $29,675 $37,175 $44,675 $52,175 $59,675 7 -$17,963 -$9,213 -$463 $8,288 $17,038 $25,788 $34,538 $43,288 $52,038 Effect on Net Income of Varying Fee and Number of Children 8 9 10 11 12 13 -$9,600 -$1,238 $7,125 $15,488 $23,850 $6,213 $400 $19,625 $29.238 $38,850 $22,463 $10,400 $21.263 $32,125 $42,988 $53,850 $38,713 $ $ $20,400 $32,513 $44,625 $56,738 $68,850 $54,963 $30,400 902 950 $43,763 $57,125 $70,488 $71,213 $40,400 $69,625 CDO DE $98,850 $87,463 $50,400 $66.263 $82,125 $97,988 $113,850 $103,713 $60,400 $77,513 $94,625 $111,738 $ 128,850 $119,963 $70,400 $88.763 $107,125 $125,488 $143,850 $136,213 14 $14,575 $32,075 $49,575 $67,075 $84,575 $102,075 $119,575 $137,075 $154,575 15 $22,938 $41,688 $60,438 $79,188 $97,938 $116,688 $135,438 $154,188 $172,938 $55,013 $84.238 5,000 6,500 1,000 12,000 24,500 $ 87,500 79.213 8,288 Day Care Wonders Income Statement Teacher:Student Ratio Required Students Teachers 1 1 7 2 13 3 19 4 Assumptions Number of Children/Day Average Days per Year Teacher Cost per Year Food per Child per Day . Supplies per Child per Year 1 2 Annual Revenue 3 Tuition per Day 1 Annual Revenue 7 250 26,000 1.3 75 Expenses Net Income Initial Values $79,213 $8,288 6 $52,825 $22,175 Effect of Varying Number of Children on Expenses and Net Income 7 8 9 10 11 12 $79,213 $79,600 $79,988 $80,375 $80,763 $81,150 $8,288 $20,400 $32,513 $44,625 $56,738 $68,850 13 $107,538 $54,963 14 $107,925 $67,075 15 $108,313 $79,188 501 87,500 $ 2,188 525 52,000 54,713 $10,013 $ Fees 35 40 45 co 50 55 60 65 70 75 Annual Variable Expenses 7 Food Expenses 3 Supplies per Year 3 Teacher Cost Total Variable Expenses 1 Annual Fixed Expenses 3 Insurance 1 Maintenance 5 Administrative & Advertising Est. Taxes Total Fixed Expenses 3 Summary Total Revenue 1. Total Expenses Net Income 3 4 5 6 $325 $7,175 $14,675 $22,175 $29,675 $37,175 $44,675 $52,175 $59,675 7 -$17,963 -$9,213 -$463 $8,288 $17,038 $25,788 $34,538 $43,288 $52,038 Effect on Net Income of Varying Fee and Number of Children 8 9 10 11 12 13 -$9,600 -$1,238 $7,125 $15,488 $23,850 $6,213 $400 $19,625 $29.238 $38,850 $22,463 $10,400 $21.263 $32,125 $42,988 $53,850 $38,713 $ $ $20,400 $32,513 $44,625 $56,738 $68,850 $54,963 $30,400 902 950 $43,763 $57,125 $70,488 $71,213 $40,400 $69,625 CDO DE $98,850 $87,463 $50,400 $66.263 $82,125 $97,988 $113,850 $103,713 $60,400 $77,513 $94,625 $111,738 $ 128,850 $119,963 $70,400 $88.763 $107,125 $125,488 $143,850 $136,213 14 $14,575 $32,075 $49,575 $67,075 $84,575 $102,075 $119,575 $137,075 $154,575 15 $22,938 $41,688 $60,438 $79,188 $97,938 $116,688 $135,438 $154,188 $172,938 $55,013 $84.238 5,000 6,500 1,000 12,000 24,500 $ 87,500 79.213 8,288