Your financial projections for the first year of operations are as follows:
1. You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:
Number of visits 10,000
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.
a. What is the clinic’s underlying cost structure?
b. What are the clinic’s expected total costs?
c. What are the clinic’s estimated total costs at 7,500 visits? At 12,000 visits?
d. What is the average cost per visit at 7,500, 10,000, and 12,500 visits?
2. Northeast Medical Group a family practice, has the following financial data and operational metrics:
Number of physicians 5
Total revenue $2,748,360
Total operating costs $1,557,615
Total procedures per physician 12,353
Patients per physician 1,941
Visits per physician 5,333
a. What is the group’s revenue per physician?
b. What is the group’s operating cost per physician?
c. What is the group’s total operating profit?
d. What is the group’s profit per physician? Per patient? Per visit? Per procedure?
3. Consider the following net cash flows:
| Year | Cash Flow |
| 0 | $ 0 |
| 1 | 250 |
| 2 | 400 |
| 3 | 500 |
| 4 | 600 |
| 5 | 600 |
a. What is the net present value if the opportunity cost of capital is 10 percent?
4. The following are selected entries for Warren Clinic for December 23, 2008, in alphabetical order. Create Warren Clinic’s balance sheet.
Accounts payable $20,000
Accounts receivable, net 60,000
Cash 30,000
Equity 230,000
Long-term debt 120,000
Long-term investments 100,000
Net property and equipment 150,000
Other assets 40,000
Other long-term liabilities 10,000
