Financial Report on Smart Nutrition Clinic

            In today’s business landscape, financial planning is essential while starting up a new business or introducing a new product in the market. Financial planning cover breakeven-analysis, risk factor, financial statements, financial ratios, and financial projection for future. In this present work financial plan is developed for Smart Nutrition Clinic. Financial budget set out for this budget is AED 700,000 that is invested by owners and 50% is supported by bank loan on 10% interest rate. Financial plan will discuss all-important information in detail to provide a complete overview of Smart Nutrition clinic financial condition.      

Company Overview of Smart Nutrition Clinic

            Smart Nutrition Clinic business will operate using smart platform rather than human inter-personal face to face interaction. Owners will execute Business operations in the targeted market by providing their customers an opportunity to visit a smart platform to get information regarding nutrition and dietitian. In the beginning, company will recruit only 1 employee to perform all duties including managerial task, social media marketing tasks, IT specialist tasks, nutrition specialist tasks, and other work duties. Company will start operations by purchasing required assets such as smart equipment for body measurement, decorative equipment, and smart system for databases.   

Financial Details of Smart Nutrition Clinic

             Financial analysis section include important financial information about current and future financial position and profitability of the company. In this section, income statement, balance sheet, cash flow statement, and financial projection are presented.     

·         Income Statement of Smart Nutrition Clinic

Income statement represents the first 3 years of the company. See the presented below statement.

Smart Nutrition Clinic
Projected Income Statements
Sales	YEAR1	YEAR2	YEAR3	TOTAL
Total Sales	720,000	720,000	720,000	2,160,000
Cost of Sales
Cost of Goods Sold (GHQ SHARE 50%)	360,000	360,000	360,000	1,080,000
GROSS PROFIT	360,000	360,000	360,000	1,080,000
Gross Profit MARGIN %	50.0%	50.0%	50.0%	50.0%
Operating Expenses
Government fees	15,000	0	0	15,000
SALARIES & WAGES	58,000	48,000	48,000	154,000
TRAVEL EXP.	0	0	0	0
Professional Fees	0	0	0	0
Miscellaneous	150	100	100	350
OTHERS	0	0	0	0
EXP.1 Electricity and Water	24,000	24,000	24,000	72,000
EXP.2 Rent	100,000	100,000	100,000	300,000
EXP.3 Maintenance	60,000	60,000	60,000	180,000
EXP.4	0	0	0	0
Depreciation	50,000	50,110	50,202	150,312
Total Operating Expenses	307,150	282,210	282,302	871,662
Operating Income	52,850	77,790	77,698	208,338
Bank Charge/Interest	41,194	26,497	19,927	87,617
Tax	10,570	15,558	15,540	41,668
Net Income	22,226	66,851	73,311	162,388
Net INCOME Margin %	3.1%	9.3%	10.2%	7.5%

 

             Total sales AED 720,000 is calculated by multiplying total volume with selling price. Cost of Goods sold (CGS) is calculated as 50% of the total sales outcomes in fiscal year. While gross margin is calculated by subtracting the cost from sales (AED 360, 000). During three years company will have to pay at least AED 528,624 tax on their operating income. Tax is calculated by using 20% tax rate on income. Moreover, salaries & wages will remain same in these years as company will not increase number of employee from 1. Professional fee 15,000 is to be paid only in first year while starting business. Depreciation of assets is as 50000, 50110, and 50202 during three year with depreciation rate of 20%.

·         Cash Flow Statement of Smart Nutrition Clinic

             Cash flow statement has three main sections that covers information about cash flow from investing, cash flow from financing, and cash flow from operations (Tulsian, 2002). See the presented below statement.

Smart Nutrition Clinic
CAPITAL EXPENDITURE & OPERATION EXPENSES
	Pre Start-up	YEAR1	YEAR2	YEAR3
OPENING CASH BALANCE	700,000	360,250	414,862	412,865
REVENUE		720,000	720,000	720,000
COSG		360,000	360,000	360,000
EXTRA RQRD. MONEY		10,000	10,000	70,000
CAPEX
Smart Equipment	150,000	0	250	0
Smart Database System	50,000			360
Decorative Equipment	50,000	0	300	100
PLANT 2	0
OTHER ASSET	0	0	0	0
Total Asset Expenditure	250,000	0	550	460
OPEX
Government fees	15,000	0	0	0
SALARIES & WAGES	10,000	48,000	48,000	48,000
TRAVEL EXP.	0	0	0	0
Professional Fees	0	0		0
Miscellaneous	0	150	100	100
OTHERS	0	0	0	0
EXP.1 Electricity and Water	6,000	18,000	24,000	24,000
EXP.2 Rent	50,000	50,000	100,000	100,000
EXP.3 Maintenance	0	60,000	60,000	60,000
EXP.4	0	0	0	0
Depreciation (GOES DIRECTLY TO IS)	0	50,000	50,110	50,202
Bank Charge/Interest	8,750	32,444	26,497	19,927
TOTAL Operating Expenses	89,750	258,594	308,707	302,229
LOAN REPAYMENTS	0	56,794	62,741	69,311
CLOSING CASH BALANCE	360,250	414,862	412,865	470,865

 

             In this statement cash in-flow is calculated by adding up all financial funding, bank loan, capital investment, and other cash inflows during these fiscal years (Loughran, 2011). While cash-outflows are calculated by adding up operating expense (e.g. salaries, electricity expense, and rent expense), financial expense (interest on loan), and asset expense (depreciation). At the end total closing cash balance of 360250, 414862, and 412865 are calculated by subtracting all cash-outflows from cash in-flows.

·         Balance Sheet of Smart Nutrition Clinic

           Balance Sheet of Smart Nutrition clinic provide overview about financial position of the company at the end of fiscal year (starting from 1^st January and ending at 31^st of December). 

Smart Nutrition Clinic
Balance Sheet		YEAR1	YEAR2	YEAR3
ASSETS
Current Assets
	Cash	414,862	412,865	470,865
	Accounts Receivable	360,000	360,000	360,000
	Inventory	5,000	6000	6,500
	Advance payments	0	0	0
	Total Current Assets	779,862	778,865	837,365
Long Terms / Fixed Assets
	Smart Equipment	150,000	150,250	150,250
	Smart Database System	50,000	50,000	50,360
	Decorative Equipment	50,000	50,300	50,400
	PLANT 2	0	0	0
	OTHER ASSET	500	500	500
	Total Fixed Assets	250,500	251,050	251,510
	COMULATIVE DEPRECIATION	-50,000	-100,110	-150,312
Intangible Assets
	Patents / Trademarks / Copyrights	15,000	15,000	15,000
	Goodwill	0	0	0
	Total Intangible Assets	15,000	15,000	15,000
	TOTAL ASSETS	995,362	944,805	953,563
LIABILITIES
Current Liabilities
	Accounts Payable	100,000	200,000	250,000
	Wages/Payroll Expenses/Commissions Payable	48,000	48,000	48,000
	Current Short Term Debt	100,000	100,000	100,000
	Other	80,000	0	0
	Total Current Liabilities	328,000	348,000	398,000
Long Term Liabilities
	Long Term Debt	293,206	230,465	161,155
	Other	0	0	0
	Total Long Term Liabilities	293,206	230,465	161,155
	Total Liabilities	621,206	578,465	559,155
OWNERS EQUITY
Owner's Equity		360,000	370,000	440,000
Retained Earnings		22,226	89,078	162,388
Less:  Owner's Draws/DIVIDENDS		0	0	0
	Total Equity	382,226	459,078	602,388
	TOTAL LIABILITIES AND EQUITY	1,003,432	1,037,543	1,161,543

 

        Cash amount is taken from closing cash balance of previous years. While accounts receivables 360000, 360000, and 360000 are the 50% of credit sales. Company did not make any unearned revenue transaction therefore advanced payments are kept 0. Other assets includes stationary and some hardware related equipment in the clinic that worth only 500 during these years. Intangible assets of license 15000 will remain same over the selected time duration.       

·         Future Projection of Smart Nutrition Clinic

           The following table represent revenue projection in the up-coming 3 years. According to this expected sales (volume) is multiplied by the selling price of 250. It is expected that each customer will visit at least once a week thus in a month total visit will be 4. In case, company get 60 customer in first year than Expected sales is (calculated by 250*(48 per year visits * 60 total customer in a year).

Smart Nutrition Clinic
Revenue Projections of Smart Nutrition Clinic
	YEAR1	YEAR2	YEAR3	Total
		COSG %		50%
PRODUCT 1
NAME: Weight Measurement for Diet
Volume	2,880.00	2,880.00	2,880.00	8,640.00
Selling price	250	250	250	250
Cost Of Goods Sold	360,000	360,000	360,000	1,080,000
Sales	720,000	720,000	720,000	2,160,000
Cost Of Goods Sold	360,000	360,000	360,000	1,080,000
Gross profit	360,000	360,000	360,000	1,080,000

 

·         Ratio Analysis of Smart Nutrition Clinic

             According to the ratios analysis we can say that company will perform well with this financial position of sale, cost, cash, current assets, and liabilities. Gross profit margin and net income margin are also greater than the required percentages therefore we can conclude that cost estimations are appropriate for Smart Nutrition Clinic. Interest coverage ratio is less than 3 in first 2 years that is not appropriate. Somehow, in third year company will get better interest coverage ratio as it will exceed 3.

Recommendations of Smart Nutrition Clinic

              Current situation of business operations indicate that company is hardly managing its expenses and costs. Company need to increase their total number of clients each year in order to maximize profitability of the company in these fiscal years. Particularly, company should emphasis on current asset and current liabilities management to ensure capacity of paying liabilities and obligations.         

Conclusion on Smart Nutrition Clinic

              Summarizing all we can say that the new business of Smart Nutrition Clinic will outperform in the market as financial analysis of future financial position and financial ratio are just according to the requirements. Positive gross margin and net income present strength towards managing cost and expense incurred by the smart clinic during the fiscal year. Moreover, financial statements balance sheet and cash flow statements represents the projected next three year financial position on the basis of given information about the company.    

References of Smart Nutrition Clinic