You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:
Revenues (10,000 visits) $400,000
Wages and benefits 220,000
Rent 5,000
Depreciation 30,000
Utilities 2,500
Medical Supplies 50,000
Administrative supplies 10,000
Assume that all costs are fixed except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30% rate.
Q. construct the clinic's projected p&L statement
To construct the projected Profit and Loss (P&L) statement for the clinic's first year of operations, we need to calculate the various components using the given information.
1. Revenues: The provided information states that there will be 10,000 visits, with a revenue of $400,000. This means each visit generates $40 in revenue ($400,000 divided by 10,000).
2. Wages and Benefits: The wages and benefits cost is stated as $220,000 and is fixed.
3. Rent, Depreciation, and Utilities: These costs are also fixed and given as $5,000, $30,000, and $2,500, respectively.
4. Medical Supplies: The cost of medical supplies is given as $50,000 and is considered a variable cost, meaning it can change based on the number of visits. Given that there are 10,000 visits, we can calculate the supply cost per visit by dividing the total supply cost by the number of visits. In this case, it would be $5 ($50,000 divided by 10,000 visits).
5. Administrative Supplies: The administrative supplies cost is given as $10,000 and is considered a fixed cost.
6. Taxes: The clinic must pay taxes at a 30% rate. To calculate the tax expense, we need to find the clinic's taxable income, which is the revenue minus all expenses. Then, we'll multiply the taxable income by the tax rate to find the tax expense.
Now, we can construct the projected P&L statement:
Clinic's Projected P&L Statement
Revenues $400,000
Wages and Benefits ($220,000)
Rent ($5,000)
Depreciation ($30,000)
Utilities ($2,500)
Medical Supplies ($50,000 x 10,000 Visits)
Administrative Supplies ($10,000)
Total Expenses ($317,500)
Operating Income $82,500
Taxes (@30%) ($24,750)
Net Income $57,750
The projected P&L statement shows the revenues, expenses, and net income for the first year of operations for the clinic.