Healthcare Finance Project: Cash Budget and Pro-Forma Analysis

This project presents a comprehensive financial analysis of All-Care Health Agency, focusing on cash budgeting and pro-forma statements. The assignment includes a detailed cash budget spanning from April to September, outlining beginning cash balances, monthly revenue, budgeted cash receipts, and cash disbursements. It also provides a rationale for the budgeting process, highlighting the importance of planning, financing, and management procedures for capital projects. The pro-forma budget statement projects sales, income, costs, and expenses, culminating in a net profit calculation. A memo to the company president summarizes the financial situation, proposing strategies such as long-term debt investments, dividend payouts, equipment purchases, and employee benefits. The project concludes with a works cited section referencing key resources on capital budgeting and finance.

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“HEALTHCARE FINANCE PROJECT”
(Part II)
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TABLE OF CONTENTS
A. Cash Budget for All-Care Health Agency from months April to September............................3
B. Rationale for budget...................................................................................................................4
C. Pro-forma budget (Projected) statement....................................................................................6
Memo to the Company President.......................................................................................................7
Works Cited.......................................................................................................................................8
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A. CASH BUDGET FOR ALL-CARE HEALTH AGENCY FROM MONTHS
APRIL TO SEPTEMBER
All Care Health Agency
Cash budget
For the Year Ending December 31st, 2018
Monthly
April May June July August Septembe
r
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Beginning Cash Balance 2,60,000 6,35,000 10,26,00
0
18,14,00
0
27,70,00
0
37,95,000
Monthly Revenue 7,00,000 7,80,000 8,20,000 9,00,000 9,50,000 8,40,000
Add: Budgeted Cash
Receipts
2,80,000 5,22,000 7,37,000 8,01,000 8,55,000 8,46,000
Total Cash Available for
Use
12,40,00
0
19,37,00
0
25,83,00
0
35,15,00
0
45,75,00
0
54,81,000
Less: Cash Disbursements
Payroll 4,10,000 4,50,000 4,70,000 5,10,000 5,35,000 4,80,000
Rent, utilities, and
miscellaneous expenses
55,000 55,000 55,000 55,000 55,000 55,000
Supplies and travel 1,05,000 1,17,000 1,23,000 1,35,000 1,42,500 1,26,000
Total Disbursements 5,70,000 6,22,000 6,48,000 7,00,000 7,32,500 6,61,000
Cash Surplus / (Deficit) 6,70,000 13,15,00
0
19,35,00
0
28,15,00
0
38,42,50
0
48,20,000
Financing:
Long-Term Debt -2,50,000
Bad -Debts -35,000 -39,000 -41,000 -45,000 -47,500 -42,000
Capital Expenditure -80,000
Net Cash from Financing -35,000 -2,89,000 -1,21,000 -45,000 -47,500 -42,000
Budgeted ending Cash
Balance
6,35,000 10,26,00
0
18,14,00
0
27,70,00
0
37,95,00
0
47,78,000
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B. RATIONALE FOR BUDGET
Any business is needed to process the planning, budgeting as well as the financing of the capital
projects where the acquisitions are required to separate the annual operating budget. Following are
the four strategies where the cost magnitude of the capital projects as well as the acquisitions has
been differed from one year to the next.
Stakes are high
The Capital infrastructure and the facilities as well as the equipment built or acquired by the
Hospital management is very often large and also expensive which requires considerable amount
of money for raising and also bring the projects with the acquisitions for fruition. There is the
special planning or financing as well as management procedures which are called for ensuring the
projects. They can invest well amount of money as there is high amount of cash balance.
Decisions implicating for some years
The capital assets are the useful lives which are extended beyond the year. There is the equipment
acquired as well as used through the local governments like vehicles and other medical equipment
for some useful life over many years.
The capital infrastructure for the hospital is assumed to long last. Long term implications is also
considered as the separate capital budgeting process than the operating budget as there the main
focus is on the annual progression (ICMA, 2012).
Spending depends from years to years
As the capital assets has to be long lived there is the typical recurs in regular basis. Also the
growth as well as the development has been occurred the spurts and also required the
infrastructure for more concentrating the years with limited to the others. While doing the meeting
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as well as funding there is the capital needs which creates some problems for the operating budget.
The resources are thus changed with the increments from one year to other years.
Debt financing is utilized often
There is the great opportunity to issue bonds or debts as the large capital asset generated can be
invested for the other forms. The debt is repaid in future with a good interest. The repayment
terms can be checked time to time and it should not be exceed the estimated life of the asset that
financed with debts (Marlowe, Riverbark, & Vogt, 2009).
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C. PRO-FORMA BUDGET (PROJECTED) STATEMENT
All Care Health Agency
Pro Forma Cash budget
For the Year Ending December 31st, 2018
Monthly
April May June July August Septembe
r
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Sales
Monthly Revenue 7,00,000 7,80,000 8,20,000 9,00,000 9,50,000 8,40,000
Other Income 2,80,000 5,22,000 7,37,000 8,01,000 8,55,000 8,46,000
Total Sales 9,80,000 13,02,000 15,57,000 17,01,000 18,05,000 16,86,000
Costs
Cost of Sales 30,000 32,000 54,000 60,000 65,000 80,000
Gross Profit 9,50,000 12,70,000 15,03,000 16,41,000 17,40,000 16,06,000
Expenses:
Marketing 3,200 5,400 4,500 25,633 4,533 7,680
General &
Administrative
40,000 43,777 54,000 67,860 76,000 80,000
Depreciation 14,167 14,167 14,167 14,167 14,167 14,167
Bad debts 35,000 39,000 41,000 45,000 47,500 42,000
Total Expenses 92,367 1,02,344 1,13,667 1,52,660 1,42,200 1,43,847
Net Profit 8,57,633 11,67,656 13,89,333 14,88,340 15,97,800 14,62,153
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MEMO TO THE COMPANY PRESIDENT
To: Mr. Mac Joe, President of All-Care Health Agency
From: Mr. Samuel
Cc. Mrs. Hutchinson
Date: February 20, 2018
Subject: Financial situation of All Care Home Health Agency
It is to inform you through this memorandum that we have target sales revenue as $40,
00,000 in the coming financial year 2018-2019 and depending on the current scenario the budget
has been planned and it is needed to be distributed to the stakeholders whereas. The budget sheet
has been prepared and attached with this memo.
The company should allow investing in some long terms debts and some in short term equities.
The 6% of the revenue earning can be announced as the dividend earning for the stakeholders.
As per the current financial situations, company can also buy new equipment which can be the 10
to 20 % of the total expenses.
The employees can be allowed to increment as $200-$2000 as per the designation. The other
benefits are also continued along with a $20000 medical insurance for each of the stuff members.
I will glad if you consider this memo as the benefits of the company and its employee.
Thank you very much!
Best regards,
Mr. Samuel, Accounting Manager of All Care Health Agency
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WORKS CITED
ICMA. (2012, 03 29). The Rationale for Capital Budgeting. Retrieved from https://icma.org/:
https://icma.org/articles/article/rationale-capital-budgeting
Marlowe, J., Riverbark, C., & Vogt, A. (2009). Capital Budgeting: Rationale, Scope, Policy, and
Process. Capital Budgeting and Finance: A Guide for Local Governments, 34-209.
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