Financial Statement Analysis

Practice Profitability Analysis

Our core service is preparing professional, dental-specific monthly accounting. Once this important work is done each month, our clients receive our proprietary Practice Proftiability Analysis report package.

When a practice owner has access to accurate and up-to-date financial data specifically designed to clearly show meaningful practice performance, the dentist is in a position to assess their financial position, fine tune profitability during the year, and avoid unnecessary tax surprises.  

Simply having the books prepared in the spring for a tax return denies the owner/dentist an opportunity to take advantage of this valuable information as the year progresses. 

Our specialized report delivered to you each month is prepared on a trailing 3-month basis to show your true, current practice performance.  Your data will be aggregated in a meaninful format so that you understand your practice's financial picutre quickly and clearly.


Key Performance Indicators

The two most important indicators of a practice's financial health are Average Revenue per Month and Practice Profit Margin.  You can think of it this way:  A practice must have adequate revenue in order to cover fixed costs, variable costs, and still have profit to be taken as owner income.  The amount of residual profit available for the owner is the profit margin.  

A healthy practice should also have an adequate cash reserve on hand to meet monthly cash requirements without the owner having to juggle money during the month to pay rent, payroll, the supply bill and more.  On the other hand, a practice owner does not need to have excess cash on hand as that money could likely be put to better use.  

The Monthly Break Even Point is the metric used to determine an appropriate cash reserve for the practice, the availability of funds to take as profit distributions, and an important factor to consider regarding future investments in the practice such as new or replacement equipment.

Each of these Key Performance Indicators are provided every month to our clients and also discussed during our regular consultations.


Performance Benchmarks

Expense benchmarks are measured a percentage of total collections and used to analyze the profitability of your practice. This is important because the true financial picture of your practice is obtained by examining your practice financial data and aggregating the information so that it is presented in a useful context.  This is difficult for an untrained accountant to do and the primary reason we provide information this format.

       


Regular Consultations

During our regular consultations, we will discuss your overall practice profitability, any activity we feel should be brought to your attention, suggestions we think may improve your profitability, and how your practice performance compares to other similar practices and certain national averages.

We will also discuss how your practice profit has been allocated, whether there are additional funds available to distribute, or if you have actually been over-distributing your profits.  

We feel that it is important to stay in touch with you throughout the year and share what we are observing in regards to your practice performance.  This is why our calendars are always publically available for our clients to schedule calls with us whenever they like.

These consultation are an integral part of our monthly practice accounting service, and you can book an appointment to review your financials any time.

 


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 800.453.0476