ESAJR HEALTH SERVICES

BUSINESS

PLAN

Prepared by: Edgardo S. Apuhin, Jr. MD

March 29, 2016

Submitted to: Dr. Nemencio C. Caete

Entrepreneurship
Professor

Home Health Care Services

I. Executive Summary
ESAJR Health Services offers a unique combination of premier home health care and
community-based social services to the Negros Island Region. Market research indicates that there is
a significant need for quality home health care and social services within this region and we believe
that by employing competent and well-educated staff and providing them with organized and
responsive management, we can become the home health care/social service agency of choice in the
Negros Island Region.
ESAJR Health Services will be created as a Negros Island Limited Liability Company based in
the Philippines, owned by its principal investors and principal operators. The initial office will be
established in Bacolod City. Bacolod City is also home to a hospital facility and could cater medical
services not yet accessible to some rural areas.
Consumers of our services will be those individuals and families in need of home health care
and/or social services. These patients are usually referred by other health care professionals such as
physicians, attorneys, insurance companies and health care facilities. Our agency has already
developed an excellent reputation with many of these professionals, through the work of our Clinical
Director, who has been providing home health care services through another agency for the past
three years, and through the presentations we have made to the community via marketing tools and
personal interactions.
Our agency is registered under the Securities and Exchange Commission and our
services reimbursed by Medicare, Medicaid and other private insurance carriers. The process for
registration and insurance certification has already been initiated and we are well on our way to
meeting the regulations and guidelines for providing home health care and social services to patients
in the Negros Island Region.
There are currently only three other home health care agencies that serve the Negros Island
Region. One is a satellite operation based out of a larger regional hospital in Dumaguete City. Kellene
Chavez currently manages this agency's operation there, and due to the lack of interest the parent
organization has demonstrated in this satellite agency, we believe that upon her transfer to ESAJR
Health Services that agency will close its Dumaguete operation. The other home health care
agencies currently operating in our area do not offer services to all four of our target Cities; they also
do not offer the unique blend of home health care and social services which ESAJR Health Services
will be providing.
All pricing will be set according to Medicare, Medicaid and other insurance regulation so
pricing is not a major factor of consideration. Sales estimates project healthy revenues in the first year
and modest increases through year three.
ESAJR is incorporated as a partnership. The primary founder, Dr. Edgardo S. Apuhin,Jr.
MD/MPA, is a physician and public administrator with prior experience in operating a social service
agency. The partnership will include a second, non-managing partner, Atty. Leonie Vee Garanzo, who
will help with initial start-up funding and retain a minority equity stake. ESAJR Health Services will be
managed by Dr. Edgardo S. Apuhin, Jr. and Dr. Theo James, our Clinical Director.

The company plans on taking on debt in the form of a five-year loan, and has no plans for
additional debt as growth will be financed mainly through cash flow. Our plan includes assumptions
of 100% sales on credit, and sufficient cash on-hand at start-up to prevent any problems with cash
flow.

1.1. Objectives

125 Home Health Care patients served by the end of first year.

12 Personal Injury Case Management Clients served by the end of first year.

Respectable gross sales by the end of first year.

80% of Customer Satisfaction Surveys returned indicating satisfaction with services.

1.2 Keys to Success

Professional quality of services offered

Reliability -- being available through on-call, and adequate staffing

Effective collaboration with other community professionals (physicians, hospitals, and other
organizations)

1.3 Mission
Our values are worth emulating. ESAJR Health Services strives to offer excellent and
affordable home health care and community-based social services to individuals and families of
Negros Island Region.
It is our goal to employ competent, caring, and well-trained individuals who are responsive to
the needs of our patients, their families, and the communities we serve. Each staff member will meet
the educational and training requirements for the services they provide. We encourage and support
continued education of each service provider. In turn, our agency will provide staff with competitive
compensation, an inviting work environment, and knowledgeable, trustworthy management and
direction.

II. Company Summary

ESAJR Health Services is a new Home Health and Social Service agency in its start-up stages. Our
agency will be located in the heart of Bacolod City and will provide the following services to patients
and clients from whole Negros Island Region:

Skilled Nursing

Nursing Aide

Social Work

Occupational, Physical, and Speech Therapy

Personal Injury Case Management

2.1 Company Ownership

ESAJR Health Services is a limited liability company owned and operated by Dr. Edgardo S. Apuhin,
Jr., MD/MPA and Atty. Leonie Vee Garanzo, CPA/MBA

2.2 Start-up Summary

ESAJR Health Services is in its start-up stage, and consequently there are start-up costs and funding
issues to address. The Start-Up Table, below, indicates in detail those costs which include the
following:

BUSINESS DEVELOPMENT

RENTAL EXPENSE

OFFICE EQUIPMENT

OFFICE SUPPLIES

NURSING SUPPLIES

NURSING SUPPLIES

The table also demonstrates Assets needed for start-up and addresses potential funding sources
which are to include cash investments made by each Owner, as well as a five-year 8% loan which will
be needed in order to cover start-up costs.

Start-up
Requirements
Start-up Expenses
BUSINESS DEVELOPMENT
Attorney Fees - Setting Up Limited Liability Company
State of Kansas Home Health Agency License
Medisoft Billing Program plus Support
Professional Liability Insurance
*Assuming 25% down of $12,000.00
Workman's Comp Insurance Deposit
Premises and Content Insurance Deposit
*Assuming 25% down of $1200.00
Contract Retainer with PT/OT/ST
Inserted Row
RENTAL EXPENSE
Office Upgrades (Carpet and Paint)
Deposit plus First
*Assuming $200.00/Month

Phone Set Up (Excluding Phones)

Utilities Deposit
Post Office Box
Inserted Row
OFFICE EQUIPMENT
2 Computers (Fully Loaded)
4-in-1 Printer/Fax/Copier/Scanner
QuickBooks Pro
Phones
Pager
Inserted Row
OFFICE SUPPLIES
Stationary
Business Cards
Brochures
Other Misc. Office Supplies
Computer
NURSING SUPPLIES
Total Start-up Expenses
Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets
Total Requirements
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities

Accounts Payable (Outstanding Bills)

Other Current Liabilities (interest-free)
Total Liabilities
Capital
Planned Investment
Elizabeth Patzer
Investor
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

Total Capital and Liabilities

Total Funding

Please note that the foregoing itemized expenses for equipment and office supplies and all
other financial statements is in US dollars considering that the co-partner of EASJR Health
Services, as such being the focal person who helps with initial start-up funding is an American
citizen doing and engaging business in the Philippines.

III. Services
ESAJR Health Services offers premier home health care that includes skilled nursing, nursing aide,
social work, occupational therapy, speech therapy, and physical therapy. We also provide personal
injury case management services which include assessment, planning, resource linkage, reporting
and professional services (court testimony, etc.).

IV. Market Analysis Summary

The consumer base for ESAJR Health Services (Home Health Care Services) will be patients
referred by physicians, health care facilities and other health care professionals. The majority of these
patients will be covered by Medicare with a smaller portion being insured by PhilHealth or other
private insurance carriers.
The consumer base for the Personal Injury Case Management component of our business will be
those individuals who have been injured either on the job or in another type of accident. These
referrals will come from attorneys seeking case management services for their clients or from

insurance companies who are requesting assistance in mitigating the injuries and loss the client
suffers.
4.1 Market Segmentation
The population base in Negros Island Region is aging, and more individuals are opting to stay in their
own homes longer and return home following hospitalization, rather than proceeding to a nursing
home. Our primary market segment includes those patients -- typically in an older age bracket -- who
require health care services by home health nursing staff. These patients may also require other
home health services, such as social work, in order to access needed community resources.
Our secondary market will be those individuals who have suffered a personal injury and require case
management services to assist them in addressing medical, financial, and employment issues.

Market Analysis
Potential Customers
HHC - Medicare Patients
HHC - Medicaid and Private Insurance Patients
PICM Patients
Total
4.2 Target Market Segment Strategy
Because our agency specializes in home health care and community-based social services, we will
focus on those market segments where we know our services are most needed. Focusing on those
market segments that require only home-based services will greatly decrease overhead, since
additional office space will not be required.

4.3 Service Business Analysis

ESAJR Health Services is a combined Home Health Care and Social Service Agency serving many
cities and municipalities in the Negros Island Region. Home health care and social services are
typically utilized by individuals and families, with service referrals coming most often from other
professionals (i.e. physicians, hospitals, attorneys, etc.).
There are currently three other Home Health Agencies serving the same area, but we are unique in
that we plan to offer community-based social services as well as home health care.
4.3.1 Competition and Buying Patterns
The key factor considered by both consumers and referring professionals when purchasing home
health care is trust in the professional reputation, reliability and quality of services provided by the
home health Agency.
Pricing of home health services does not usually influence consumers' choices, as most home health
services are reimbursed by Philhealth, Medicare, Medicaid, and private insurance companies, and
reimbursement rates are set by those entities. Pricing of personal injury case management services is
a more important factor, as these services are paid for as negotiated on a case-by-case basis at an
hourly rate. When pricing personal injury case management services, we will explain to the client that
we estimate the total number of hours needed to complete services liberally, rather than bidding low
and then exceeding the anticipated total bid price for services.
Consumers of both home health care services and personal injury case management services rarely
compare service providers directly. Usually they follow word-of-mouth recommendations, especially
when those recommendations come from their physicians.
Perhaps the most important element for assessing competition in the Home Health and Social
Service fields is how to persuade other professionals to repeatedly refer their clients to our agency for
services. As our agency demonstrates outstanding patient care, current and pertinent qualification of
service providers, and professional organization and business management, we believe that we will
be able to capture the majority of the home health care and personal injury case management market
in our designated region.
V. Strategy and Implementation Summary
ESAJR Health Services will focus on the cities and municipalities within the Negros Island Region.
Within this geographical area we will target two specific programs:

home health care

personal injury case management

Within each area, we have two target markets: the actual client, and the regional physicians, health
care facilities, attorneys and insurance companies who refer them to our services.

5.1 Competitive Edge

We start with a competitive edge: There are currently only three home health care agencies serving
southeastern Kansas; Dr. Theo James, our Clinical Director, has been employed with one of them for
three years and has learned many of the day-to-day administrative functions that make a home health
care agency successful. Dr. James has built a reputation for outstanding customer service, and it is
our belief that her reputation will help to build a strong client base even before our start-up date.
ESAJR Health Services will also stand out in integrating community-based social services, such as
Personal Injury Case Management, with our more traditional home health care. This broader base will
allow us to access additional clientele and payor bases, adding to our financial stability. This
integration also leaves room in the long-term for the addition of other social services, such as Family
Counseling, Psycho-Educational Services, and Mental Health Case Management.
5.2 Marketing Strategy
Marketing our service-oriented business requires establishing a reputation for expertise and
excellence. It starts with our known contacts who are in positions to recommend us and make
referrals to us, and continues with long-term efforts to develop recognition among other professionals
within the health care and social service fields.
We will develop and maintain a database of our contacts in the field. Dr. James is already well-known
to physicians, other nurses and hospital facilities in our market area, and will work to maintain those
relationships throughout our start-up process. Ms. Patzer will make initial contacts in the community
as she establishes the business entity and provider status with Philhealth, Medicare, Medicaid,
private insurance companies and local attorneys. She will then join Dr. James in an effort to introduce
ESAJR Health Services to area professionals who are potential referral sources. Our communications
will be professional, as will our marketing tools such as brochures, business cards, and
advertisements.
5.3 Sales Strategy
Sales in our business means quality patient service and utmost satisfaction from referring physicians
and health care facilities. It is perpetual business. One doesn't sell home health care and personal
injury case management; rather one sells excellent care, availability, and effective interpersonal
relationships.
In a service industry, growth can mean loss of quality control, which in turn leads to client
dissatisfaction. The services we provide should always reflect the mission and oversight of
management. We want our clients to know that the quality of service they receive will be excellent,
regardless of the individual service provider performing the service.
We will therefore avoid the temptation to broaden the scope of our services too quickly. Rather,
we will focus our immediate attentions on making the services we offer of the highest possible quality.
Only when those services are well-established and grounded in excellence will we consider
expanding our service base.

5.3.1 Sales Forecast

Annual sales reflect a conservative average of 125 new Home Health Care patients for the first year
with a modest increase per year thereafter. This figure is based on the number of patients currently
being seen by an existing home health care agency in Negros Island Region. Research indicates that
this agency is a satellite office of a larger regional organization and investment in the satellite office
has been minimal. We believe that with a greater investment in marketing, employee relations, and
customer service this client base can grow significantly.
The projected annual figures for Personal Injury Case Management sales are relatively low, as this
portion of the business will initially be secondary to the Home Health Care Services. However, we
project a jumped up annual growth after the first year, as market analysis indicates there is a
significant need for these services. As the Home Health Care portion of the business
stabilizes management will focus growth efforts on the Personal Injury Case Management program.

Sales Forecast

Sales
Home Health Care Sales
Personal Injury Case Management Sales
Total Sales

Direct Cost of Sales

Home Health Care Sales
Personal Injury Case Management Sales
Subtotal Direct Cost of Sales
5.4 Milestones
The accompanying table lists important program milestones, with dates and managers in charge, and
budgets for each. The milestone schedule indicates our emphasis on planning for implementation.
What the table doesn't show is the commitment behind it. Our business plan includes complete
provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings to discuss the
variance and course corrections.

Milestones
Milestone
Attorney Draws Up LLC

Start Date
1/1/20016

End Date
1/31/2017

Budget
$875

Manager
Beth

Department
Administrator

Verify Numbers For Budget

8/1/2016
Meeting with CPA for tax advise
1/7/2016
and request for Tax ID
Identify Office Location
1/2/2016
Finalize Application for Insurance
12/15/2016
Coverages
Apply for State Licensure
2/1/2016
Apply for Bank Loan
1/2/2016
Finalize Lease Agreement
2/1/2016
Move Into Offices and Prepare for
12/13/2015
Site Survey
Site Survey
2/19/2016
Develop/Finalize
all
forms,
2/15/2016
procedures, employment contracts
Apply for all Provider Numbers
1/15/2016
Hold First All Staff Meeting
1/15/2016
Totals

9/15/2016

$0

Beth

Administrator

1/15/2016

$0

Beth

Administrator

1/15/2016

$0

Beth

Administrator

1/31/2016

$4,800

Beth

Administrator

2/1/2016
2/1/2016
2/1/2016

$100
$0
$800

Beth
Beth & Brad
Beth

Administrator
Administrator
Administrator

2/20/2016

$10,000

Beth

Administrator

3/29/2016

$0

Beth

Administrator

3/1/2016

$350

Beth & Theo

Administrator

3/1/2016
1/15/2016

$0
$50
$16,975

Beth
Beth & Theo

Administrator
Administrator

VI. Management Summary

ESAJR Health Services' initial team will consist of one Administrative Director, one Clinical
Director, three employees and a contracted agency to fulfill the need for Physical Therapists,
Occupational Therapists, and Speech Therapists. Initially, both managers will also provide direct
service. Elizabeth Patzer is a licensed social worker and will provide all social work services during
the start-up stage of the business. She will also provide all administrative direction and will perform
most of the administrative functions with assistance from an Administrative Assistant. Dr. Theo James
is a registered nurse and has experience as a Skilled Nurse and Director of Nursing for a Home
Health Agency. She will also provide direct nursing services during the initial stages of the business,
as well as supervising the nursing staff. As the need for service providers grows, both managers will
assume primary roles in management and will delegate direct service to employees.
ESAJR Health Services has no current management or personnel gaps; our plan provides for hiring
service providers only as growth demands. Job descriptions have been written for each position and
we will develop an employee handbook prior to our Start Date.
6.1 Personnel Plan
The following is an explanation of personnel needs, costs, and benefits as listed in the Personnel
table. The projections for the next three years are based on minimal growth in client base and
therefore no resulting impact on payroll due to increased hours of service. A cost of living increase is
noted for all employees but does not impact the Administrative Director as she is the owner of the
business and will realize increase through profit gains.

Administrative Director -- This position will be held by the agency owner. The Administrative
Director will also assume all Social Work hours of service during the initial stages of the
venture as those hours are projected to be minimal. It is assumed that as need for Social Work
hours increases a second Social Worker will be hired. *Owner's compensation will be made in
the form of a draw and will not include payroll taxes, cost of insurance, etc., as these costs will
be assumed by the owner; these after-tax expenses can be found in the detailed Profit and
Loss table.

Clinical Director -- This position will be held by Dr. Theo James, who has prior experience as
Clinical Director for a home health care agency in Dumaguete City. Dr. James compensation
will be in the form of a salary, based for the first year on $1000/week in its equivalent to peso
value. It has been agreed that at the end of each calendar year Dr. James shall be entitled to a
TBA percent of the company's net profits (less taxes and interest expense). The company will
pay employer portion of payroll taxes for Dr. James and will allow for 4 weeks of paid personal
leave per year and 11 paid holidays, but benefits will not include medical insurance, retirement
or other fringe benefits. The Clinical Director will also assume the majority of Skilled Nursing
hours of service during the initial stages of the venture as that will be her primary role. As the
need for additional Skilled Nursing hours increases, additional Skilled Nurses will be hired.

Administrative Assistant -- This position is based on 30 hours per week reimbursed, at

$12.00 per hour in its equivalent peso value. Initially there will be no benefits attached to this
position except for four weeks of paid personal leave and 11 paid holidays to be used at the
discretion of the employee with prior notification to the Administrator.

Skilled Nurse -- This position will be paid $18.50 per hour in its equivalent peso value for
direct service hours. The total reimbursement as shown in the Personnel Table is calculated on
1040 hours per full year. In addition, the Skilled Nurse will be paid $408 per month for On-Call
Hours served. On-Call Hours are figured at $1.50/hr. x 16 hrs x 5 days + $1.75/hr x 24 hours x
2 days x 2 weeks/month. There will be no benefits attached to this position other than 2 weeks
of paid personal leave and 5.5 paid holidays per year, as this is a part-time position.

Nurse's Aide -- This position will be paid $10.00 per hour in its equivalent peso value for direct
service hours. The total reimbursement as shown on the Personnel Table is calculated on 1040
hours per year. There will be no benefits attached to this position other than 2 weeks of paid
personal leave and 5.5 paid holidays per year, as this is a part-time position.

Social Worker -- This position will be paid $18.50 per hour in its equivalent peso value for
direct service hours. The total reimbursement as shown in the Personnel Table is calculated on
520 hours per year. There will be no benefits attached to this position initially until the need for
more hours of service is realized.

We will also contract for other therapeutical services, as described below. These contracted expenses
can be found in the Profit and Loss table.

Physical Therapist/Occupational Therapist/Speech Therapist -- These positions will be

contracted at a rate of $30.00 per hour in its equivalent peso value. The total reimbursement is
based on 650 hours per year. There will be no benefits attached to these positions, as they are
contracted on a fee-for-service reimbursement basis only.

Personnel Plan

Year 1
Administrative Director - Elizabeth
$0
Patzer, MSW/MPA
Clinical Director Dr. Theo James, RN $52,000
Administrative Assistant
$18,720
Skilled Nurse
$20,110
Nurses Aide
$10,413
Social Worker
$8,100
Total People
7

Year 2

Year 3

$0

$0

$53,560
$19,282
$24,856
$10,712
$9,912
7

$55,167
$19,860
$25,601
$11,033
$10,209
7

Total Payroll

$118,322

$121,870

$109,343

VII. Financial Plan

We want to finance growth mainly through cash flow. We recognize that this means we will have to
grow more slowly than we might like.
The most important factor for our financial plan is collection of receivables. Our home health care
services will be reimbursed primarily by Medicare, Medicaid, and other private insurances. History
indicates that these payors are sometimes slow to reimburse and receivables can get hung up in the
automated payment system if not tracked closely. As we broaden our scope of services to include a
larger payor base, these lags in collection of receivables will have less impact on cash flow.
Our figures are based on start-up capital as shown in the Start-up and Start-up Funding tables;
we will consider an additional loan if needed.
7.1 Important Assumptions
The General Assumptions table, below, shows our important (and conservative) annual assumptions
concerning interest rates, tax rates, and personnel burden. In addition:
1. We assume a strong economy, without major recession.
2. We assume, of course, that there are no significant unforeseen changes in the federal policy
that dictates Medicare and Medicaid reimbursement of Home Health Care Services.
3. General Assumptions

Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

7.2 Break-even Analysis

The Break-even Analysis below is based on monthly fixed costs and an Average Per Unit Variable
Cost. This assumption about cost of sales may at first look low, but in our service-based business,
payroll is included with other operating expenses in our fixed monthly amounts, so the variable costs
relate to the only other cost of service provided: mileage to and from service locations.
At these levels, we need to bill and collect the amount shown below per month to cover our per month
costs. We don't really expect to reach break-even until a few months into the business operation.

Break-even Analysis

Monthly Revenue Break-even

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
7.3 Projected Profit and Loss
Our projected profit and loss is shown in the following table, with sales increasing throughout
the three years of the plan, and profits are notable even for the start-up phase of this business. per
month

We are projecting growth and total annual sales very conservatively, with high projected expenses.
Our cost of sales is relatively low, as this is a service agency and the primary costs involved in
providing the services are those related to payroll. The costs of sales reflects the cost of mileage
reimbursement to employees, because the services we provide are home- and community-based and
require travel to and from service locations.
The Profit and Loss table also contains our expenses for independently contracted physical,
occupational and speech therapists, as well as the owner's and Clinical Director's after-tax draws.

Pro Forma Profit and Loss

Year 1
Sales
$432,940
Direct Cost of Sales
$24,121
Other Costs of Sales
$0
Total Cost of Sales
$24,121

Year 2
$480,074
$24,676
$0
$24,676

Year 3
$533,073
$25,245
$0
$25,245

Gross Margin
Gross Margin %

$408,819 $455,398 $507,829

94.43% 94.86% 95.26%

Expenses
Payroll

$109,343 $118,322 $121,870

Payroll Taxes
$29,920
Depreciation
$0
Rent
$2,400
Heat and Lights
$1,800
Phone
$3,000
Cell Phones
$1,800
Water and Garbage
$600
Internet Access
$300
Professional
Liability
$9,000
Insurance
Workman's
Comp
$600
Insurance
Premises and Content
$600
Insurance
Advertising
and
$1,200
Marketing
Meals
and
$600
Entertainment
Professional
$1,200
Development
Office Equipment and
$4,800
Supplies
Contracted Therapists:
$19,500
OT/PT/ST
Nursing Supplies
$12,000
Total
Expenses

Operating

$30,956
$0
$3,600
$1,800
$3,000
$1,800
$600
$300

$12,000

$12,000

$600

$600

$600

$600

$1,200

$1,200

$600

$600

$1,200

$1,200

$4,800

$4,800

$19,500

$19,500

$12,000

$12,000

$198,663 $212,346 $216,425

Profit Before Interest

$210,156
and Taxes
EBITDA
$210,156
Interest Expense
$4,000
Taxes Incurred
$61,847
Net Profit
Net Profit/Sales

$30,423
$0
$3,600
$1,800
$3,000
$1,800
$600
$300

$243,053 $291,403
$243,053 $291,403
$4,000
$4,000
$71,716 $86,221

$144,309 $167,337 $201,182

33.33% 34.86% 37.74%

7.4 Projected Cash Flow

The following cash flow projections show the annual amounts only. Collection of accounts receivable
from our sales on credit will greatly affect our cash flow. Cash flow projections are critical to our
success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow
per month, and the other the monthly cash balance. The annual cash flow figures are included here
and the more important detailed monthly numbers are included in the appendix.

Pro Forma Cash Flow

Cash Received

Cash from Operations

Cash Sales
Cash from Receivables
Subtotal Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets

New Investment Received

Subtotal Cash Received

Expenditures

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

Net Cash Flow

Cash Balance
7.5 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth, and a
sufficiently healthy financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet

Assets

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

Liabilities and Capital

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

Long-term Liabilities
Total Liabilities

Paid-in Capital
Retained Earnings
Earnings

Total Capital
Total Liabilities and Capital

Net Worth
7.6 Business Ratios
The following table shows the projected businesses ratios, and a comparison of our ratios with
standards for the home health care industry (SIC code 8082.000). We expect to maintain healthy
ratios for profitability, risk, and return.

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

0.00%

10.89%

11.04%

3.71%

Accounts Receivable

43.51%

27.05%

19.52%

21.90%

Other Current Assets

1.66%

0.93%

0.61%

45.48%

Total Current Assets

100.00%

100.00%

100.00%

69.58%

Long-term Assets

0.00%

0.00%

0.00%

30.42%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

8.66%

4.25%

2.99%

35.62%

Long-term Liabilities

23.74%

13.31%

8.65%

21.27%

Total Liabilities

32.40%

17.56%

11.63%

56.89%

Net Worth

67.60%

82.44%

88.37%

43.11%

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

94.43%

94.86%

95.26%

100.00%

Selling, General & Administrative

63.87%
Expenses

67.34%

66.75%

85.34%

Advertising Expenses

0.00%

0.00%

0.70%

Sales Growth

Percent of Total Assets

Percent of Sales

0.00%

Profit Before Interest and Taxes

48.54%

50.63%

54.66%

0.35%

Current

11.54

23.51

33.49

1.52

Quick

11.54

23.51

33.49

1.20

Total Debt to Total Assets

32.40%

17.56%

11.63%

62.84%

Pre-tax Return on Net Worth

144.76%

77.18%

56.25%

1.09%

Pre-tax Return on Assets

97.86%

63.62%

49.71%

2.93%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

33.33%

34.86%

37.74%

n.a

Return on Equity

101.33%

54.02%

39.38%

n.a

Accounts Receivable Turnover

4.72

4.72

4.72

n.a

Collection Days

57

73

73

n.a

Accounts Payable Turnover

9.83

12.17

12.17

n.a

Payment Days

27

32

29

n.a

Total Asset Turnover

2.06

1.28

0.92

n.a

Debt to Net Worth

0.48

0.21

0.13

n.a

Current Liab. to Liab.

0.27

0.24

0.26

n.a

Net Working Capital

$192,408

$359,745

$560,927

n.a

Interest Coverage

52.54

60.76

72.85

n.a

Main Ratios

Activity Ratios

Debt Ratios

Liquidity Ratios

Additional Ratios

Assets to Sales

0.49

0.78

1.08

n.a

Current Debt/Total Assets

9%

4%

3%

n.a

Acid Test

6.52

17.15

26.96

n.a

Sales/Net Worth

3.04

1.55

1.04

n.a

Dividend Payout

0.00

0.00

0.00

n.a

Appendix
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Home
Sales

Health

Care

0%

$25,000 $27,000 $27,900 $29,390 $31,000 $33,000 $35,000 $37,000 $39,000 $41,000 $42,900 $45,550

Personal Injury Case

0%
Management Sales

$900

Total Sales

$25,900 $28,000 $29,100 $30,590 $32,400 $34,500 $36,600 $38,800 $40,900 $43,000 $45,100 $48,050

Direct Cost of Sales

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Home
Sales

$1,313

$1,418

$1,465

$1,543

$1,628

$1,733

$1,838

$1,943

$2,048

$2,153

$2,252

$2,391

Personal Injury Case

Management Sales

$113

$125

$150

$150

$175

$188

$200

$225

$238

$250

$275

$313

Subtotal Direct Cost of

Sales

$1,425

$1,543

$1,615

$1,693

$1,803

$1,920

$2,038

$2,168

$2,285

$2,403

$2,527

$2,704

Health

Personnel Plan

Care

$1,000

$1,200

$1,200

$1,400

$1,500

$1,600

$1,800

$1,900

$2,000

$2,200

$2,500

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9

Month
10

Month 11 Month 12

Administrative Director Elizabeth

Patzer, 0%
MSW/MPA

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Clinical Director - Kellene

0%
Walker, RN

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

$4,333

Administrative Assistant

0%

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

$1,560

Skilled Nurse

0%

$0

$0

$2,011

$2,011

$2,011

$2,011

$2,011

$2,011

$2,011

$2,011

$2,011

$2,011

Nurses Aide

0%

$867

$867

$867

$867

$867

$876

$867

$867

$867

$867

$867

$867

Social Worker

0%

$0

$0

$810

$810

$810

$810

$810

$810

$810

$810

$810

$810

Total People

Total Payroll

$6,760

$6,760

$9,581

$9,581

$9,581

$9,590

$9,581

$9,581

$9,581

$9,581

$9,581

$9,581

General Assumptions

Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Pro Forma Profit and Loss

Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales

Gross Margin
Gross Margin %

Expenses

Payroll
Payroll Taxes

15%

Depreciation
Rent
Heat and Lights
Phone
Cell Phones
Water and Garbage
Internet Access
Professional Liability Insurance
Workman's Comp Insurance
Premises and Content Insurance
Advertising and Marketing
Meals and Entertainment
Professional Development
Office Equipment and Supplies

15%

Contracted Therapists: OT/PT/ST

15%

Nursing Supplies

Total Operating Expenses

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

Net Profit
Net Profit/Sales

Pro Forma Cash Flow

Cash Received

Cash from Operations

Cash Sales
Cash from Receivables
Subtotal Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

Expenditures

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

Net Cash Flow

Cash Balance

Pro Forma Balance Sheet

Assets

Starting Balances

Current Assets
Cash

$44,599

Accounts Receivable

$0

Other Current Assets

$3,500

Total Current Assets

$48,099

Long-term Assets
Long-term Assets

$0

Accumulated Depreciation

$0

Total Long-term Assets

$0

Total Assets

$48,099

Liabilities and Capital

Current Liabilities
Accounts Payable

$0

Current Borrowing

$0

Other Current Liabilities

$0

Subtotal Current Liabilities

$0

Long-term Liabilities

$50,000

Total Liabilities

$50,000

Paid-in Capital

$20,000

Retained Earnings

($21,901)

Earnings

$0

Total Capital

($1,901)

Total Liabilities and Capital

$48,099

Net Worth

($1,901)