Part a: Cash Budget for January to March
Question 1:
a. Preparing the cash budget for January to March:
|
Particulars |
January |
February |
March |
|
Cash Income |
|||
|
Bulk-billed patients |
$ 24000 |
$ 31200 |
$ 28800 |
|
Non-bulk-billed patients |
$ 22200 |
$ 23700 |
$ 26400 |
|
Non-Medicare patients |
$ 16500 |
$ 15000 |
$ 19500 |
|
Total Cash Income |
$ 62700 |
$ 69900 |
$ 74700 |
|
Cash outgoing |
|||
|
Salaries |
|||
|
Receptionists |
$ 6,000 |
$ 6,000 |
$ 6,000 |
|
Doctors |
$ 12,000 |
$ 12,000 |
$ 12,000 |
|
$ 18,000 |
$ 18,000 |
$ 18,000 |
|
|
Operating expenses |
|||
|
mortgage repayments |
$ 3,000 |
$ 3,000 |
$ 3,000 |
|
Insurance |
$ 5,000 |
$ – |
$ – |
|
Cleaning and cost centre |
$ 500 |
$ 500 |
$ 500 |
|
Other expense |
$ 100 |
$ 100 |
$ 100 |
|
phone bill |
$ 1,500 |
$ – |
$ – |
|
electricity bill |
$ – |
$ 2,500 |
$ – |
|
Mobile plans |
$ 300 |
$ 300 |
$ 300 |
|
Car lease |
$ 10,000 |
$ 10,000 |
$ 10,000 |
|
Motor vehicle running cost |
$ 1,000 |
$ 1,000 |
$ 1,000 |
|
New medical and office equipment |
$ – |
$ 85,000 |
$ – |
|
$ 21,400 |
$ 102,400 |
$ 14,900 |
|
|
Total Cash outgoing |
$ 39,400 |
$ 120,400 |
$ 32,900 |
|
Monthly Cash Balance |
$ 8500 |
$ 31,800 |
$ (18,700) |
|
Closing balance |
$ 31,800 |
$ (18,700) |
$ 23,100 |
b. Depicting the amount loan needed for the new equipment with a bank balance of 8,500:
From the relevant calculation of the budget it could be identified that minimum $ 27,200 will be required as loan for purchasing the equipment’s. The calculation mainly depicts that the closing balance for the period of February is mainly at the level of -$ 18,700, while minimum monthly cash balance needs to ben at the levels of $ 8500. This relevantly makes the minimum loan amount at the levels of $ 27,200 is needed by Bondi Junction Medical Centre.
c. Depicting the amount loan needed for the new equipment with a bank balance of 8,500 when revenues changed:
|
Particulars |
January |
February |
March |
|
Cash Income |
|||
|
Bulk-billed patients |
$ 24000 |
$ 31200 |
$ 28800 |
|
Bulk-billed patients |
$ 12000 |
$ 15600 |
$ 14400 |
|
Non-Medicare patients |
$ 16500 |
$ 15000 |
$ 19500 |
|
Total Cash Income |
$ 52500 |
$ 61800 |
$ 62700 |
|
Cash outgoing |
|||
|
Salaries |
|||
|
Receptionists |
$ 6,000 |
$ 6,000 |
$ 6,000 |
|
Doctors |
$ 12,000 |
$ 12,000 |
$ 12,000 |
|
$ 18,000 |
$ 18,000 |
$ 18,000 |
|
Operating expenses |
|||
|
mortgage repayments |
$ 3,000 |
$ 3,000 |
$ 3,000 |
|
Insurance |
$ 5,000 |
$ – |
$ – |
|
Cleaning and cost centre |
$ 500 |
$ 500 |
$ 500 |
|
Other expense |
$ 100 |
$ 100 |
$ 100 |
|
phone bill |
$ 1,500 |
$ – |
$ – |
|
electricity bill |
$ – |
$ 2,500 |
$ – |
|
Mobile plans |
$ 300 |
$ 300 |
$ 300 |
|
Car lease |
$ 10,000 |
$ 10,000 |
$ 10,000 |
|
Motor vehicle running cost |
$ 1,000 |
$ 1,000 |
$ 1,000 |
|
New medical and office equipment |
$ – |
$ 85,000 |
$ – |
|
$ 21,400 |
$ 102,400 |
$ 14,900 |
|
|
Total Cash outgoing |
$ 39,400 |
$ 120,400 |
$ 32,900 |
|
Monthly Cash Balance |
$ 8500 |
$ 21,600 |
$ (37,000) |
|
Closing balance |
$ 21,600 |
$ (37,000) |
$ (7,200) |
The above table represents the changes in calculation, which needs to be conducted by Bondi Junction Medical Centre for increasing its competitiveness in the market. Therefore, the overall income of Bondi Junction Medical Centre will decline, which increases the amount of loan required for the purchase of the new equipment. Therefore, under the current circumstances Bondi Junction Medical Centre will require a loan of $ 45,500 to replenish the negative closing balance and maintain $ 8,500 in the monthly cash balance.
d. Depicting the report for Bondi Junction Medical Centre concerning all the cash flow situation:
After analysis the calculation of three-month budget, it could be identified that the management will require loan for purchasing the equipment. Under normal circumstance the loan amount will be at the level of $ 27,200 taken during the period of February, as the closing balance is negative. Furtherer, analysis on the new GP practice is conducted, which is directly affecting the revenue stream of the medical centre. The combined revenue of the centre has fallen for each month forcing the closing balance to decline and become negative. Thus, under the adverse circumstance the overall loan amount for the new machine to be purchased by the medial centre and having a monthly closing balance of $ 8,500 is at the levels of $ 45,500. The financial future of the centre is relatively high, where adequate adjustment to the costing needs to be conducted for increasing its competitiveness and maximise the profits generated from operations (Gopee and Galloway 2017).
a. Depicting the profit or loss is expected for the Surgery Centre for the month of June 2018:
|
Particulars |
Units |
Charges |
Supplies |
|
Procedure 1 |
40 |
4000 |
800 |
|
Procedure 2 |
40 |
5000 |
3500 |
|
Total Procedure |
80 |
9000 |
|
Budget |
|
|
Revenue |
$ 360,000 |
|
Expenses |
|
|
Doctors’ Fees |
$ – |
|
Surgical Supplies |
$ 172,000 |
|
Salaries |
$ 20,500 |
|
Occupancy costs |
$ 18,200 |
|
Communication |
$ 1,200 |
|
Total Expenses |
$ 211,900 |
|
Net Cash Flow (Profit) |
$ 148,100 |
b. Depicting the procedures needed for making a profit of 20,000 minimum, while providing advice on current pricing and costing structure of the Centre:
The difference in actual figures and budgeted figures is due to the accounts used in calculating the statement. The difference in profit is due to the anticipation of cost incurred by the centre during the period. The expenses related to occupancy cost, communication and equipment incurred during June have relevantly increased than the anticipated expense. The number of procedures also declined for the period, which is also the main reason behind the decline in cash flow of the centre.
|
Particulars |
Units |
Charges |
Supplies |
|
Procedure 1 |
70 |
4000 |
1000 |
|
Procedure 2 |
71 |
5000 |
3600 |
|
Total Procedure |
141 |
9000 |
|
Altered Budget |
|
|
Revenue |
$ 635,000 |
|
Expenses |
|
|
Doctors’ Fees |
$ – |
|
Surgical Supplies |
$ 325,600 |
|
Salaries |
$ 20,500 |
|
Occupancy costs |
$ 24,000 |
|
Communication |
$ 4,200 |
|
Equipment |
$ 240,000 |
|
Total Expenses |
$ 614,300 |
|
Net Cash Flow |
$ 20,700 |
The overall profit of 20,000 can be accumulated by the centre when procedures 1 needs 70 units and procedures 2 needs units 71 units. Therefore, with the 141 procedures under both procedure 1 and 2 the net profit will be at the level of 20,700. The current pricing structure of needs to be improved, which might help in minimising the level of expenses and improving profits for the Centre. The Centre should focus its activities in procedures 1, as it has the lowest surgical supplies and helps in increasing profits for the Centre (Zingg et al. 2015).
References:
Gopee, N. and Galloway, J., 2017. Leadership and management in healthcare. Sage.
Zingg, W., Holmes, A., Dettenkofer, M., Goetting, T., Secci, F., Clack, L., Allegranzi, B., Magiorakos, A.P. and Pittet, D., 2015. Hospital organisation, management, and structure for prevention of health-care-associated infection: a systematic review and expert consensus. The Lancet Infectious Diseases, 15(2), pp.212-224.
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