North Sask Laundry
&
Support Services Ltd
Business Plan 2004
1200 24th Street West
Prince Albert, Saskatchewan, S6V 5T4
Phone: 306-764-5264
Fax: 306-922-4858
Email: nslaundry@sasktel.net
Website: www.northsasklaundry.com
Contact: James T Watchman
CONFIDENTIAL INFORMATION
North Sask Laundry & Support Services Ltd – Business Plan 2004
Table of Contents
EXECUTIVE SUMMARY ……………………………………………………… Pg 2
STRATEGIC PLAN – 2004
……………………………………………… Pg 3
Environmental Assessment
1999 Strategic Positions and Issues Review
Goals Review
Objectives
THE COMPANY
……………………………………………………………… Pg 10
Historical Events and Projects
Current Projects
Management Profile
Staffing
THE SASKATCHEWAN HEALTH CARE MARKET ……………………… Pg 13
FINANCIAL HISTORY
……………………………………………………… Pg 14
Poundage
Revenue
Expenses
Cash Flow
Financial Ratios
PRODUCTS AND SERVICES
THE FINANCIAL PLAN
……………………………………………… Pg 19
……………………………………………………… Pg 21
Poundage
Financial Forecast
Capital Requirements
Impact on Balance Sheet
Impact on Cash Flow
Financial Ratios Projections
Conclusion
APPENDICES
……………………………………………………………… Pg 25
CONFIDENTIAL INFORMATION
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North Sask Laundry & Support Services Ltd – Business Plan 2004
EXECUTIVE SUMMARY
This business plan has been developed as a continuation to the financial recovery plan
laid out in the Business Plan of 1999. The Strategic Plan was reviewed and revised in
2004 by the Board of Directors (Appendices: page 1). The plan reviews the successes and
failures to achieve the goals of that Plan.
The Laundry faces challenges with decreasing volumes, increasing energy and chemical
costs, and physical limitations with space. The financial challenge will improve with the
retirement of the loan for linens (2005) and the long-term debt (2009). The Quala
tracking system has enabled the improvement of services and financial recovery of lost
and damaged items.
This Plan enables the Laundry to continue on the path of financial recovery while
preparing for major equipment replacement or upgrades to remain a high production
plant. The replacement and upgrades will be financed though the operation without
having to secure bank financing. The improvement of cash flow will be easier to manage
and enable the operation more flexibility financially to take advantage of opportunities
that will come up in the future.
This plan promotes customer participation to control linen cost within their facilities. The
Quala System will continue to be developed to provide customer better access and
reporting capabilities.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
STRATEGIC PLAN – 2004
The Vision and Mission Statement have not changed. These Ends are documented in the
Governance Policies and are reviewed three times a year by the Board of Directors.
Environmental Assessment
The internal strengths, weaknesses, external opportunities and potential threats (SWOT)
were reviewed with the 1999 strategic plan. Changes are highlighted.
Internal Strengths:
•
Stable labor relations, employee attitudes are good
•
Good equipment but requiring some upgrades
o Fabian Oulette of Lavexco evaluated the washer/dryer system and noted
two requirements for the future are: an upgrade in computers and
replacement of the centre core in two to three years
•
Good management
•
Good location, central to all customers
•
Transportation, interact with Customers and Laundry
•
Canadian Benchmarking Initiative
o NSL has participated in an annual benchmarking project with other health
care laundries in Canada
•
Improved delivery of linens
o The Quala system has enabled the laundry to improve fill rates from
83.8% in 2001 to 97.8% in 2004
•
Financial reporting
o New financial reporting break downs have identified operating cost and
have assisted in better budgeting results
Internal Weaknesses:
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North Sask Laundry & Support Services Ltd – Business Plan 2004
•
Financial status
•
Need to improve relationship with Customers
•
Limited linen inventory space in plant
External Opportunities:
•
Add to volume through current and new customers
•
Develop new long term care products and services
•
K-Bro Report 2002
o Identified NSL as the most productive laundry in Saskatchewan that
provides more value added services than other operations
External Threats:
•
The political environment
•
Competitors – other laundry services and disposable products
•
Lack of space in the plant
This plan must recognize the shortcomings of the 1999 Business Plan, continue to build
on the strengths, resolve the internal weaknesses, exploit the opportunities, and confront
the threats that are identified.
1999 Strategic Positions and Issues Reviewed
The SWOT review revisited the positions and issues that were identified in the 1999
Business Plan. The review evaluated the Laundry’s success and failure in its positions
and issues to meet its objectives.
Position Strengths:
•
The operation meets or exceeds all accreditation, OHS, and Health and Welfare
Guidelines and infectious control requirements.
o This continues to be the case. New legislation for Return-To-Work and
Duty to Accommodate programs have been established, a review of the
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North Sask Laundry & Support Services Ltd – Business Plan 2004
impact of SARS and necrotizing fasciitis has been done, and a
representative participates on the accreditation committee of the Prince
Albert Parkland Health Region.
•
Transportation routes established to service all Customer/Shareholders.
•
Established personal linen services and long-term care products
o With decreasing volume the personal linen services is struggling to be cost
effective. Other central laundries have ventured into to this area of service.
Participation on the Canadian Benchmarking Initiative has provided new
ideas of service and costing.
o Currently Australian sheepskin products are being evaluated for function
and costing from the depot in North Battleford.
•
Age and type of equipment is still the latest technology available.
o An evaluation of the washer/dryer equipment by an engineer has identified
that the equipment is in excellent condition. Future considerations were
identified as replacing the computer system and replacement will be
required within the next three years of the center core and steam head.
•
Energy supply locations and leases agreements
o Joint discussions with the Prince Albert Parkland Health Region energy
center to review energy savings that can be achieved through heat
recovery.
o The ability of the energy center to meet future increased demand was also
reviewed with positive results.
•
Cost of disposable packs.
o The introduction of ‘pack-ready’ OR linens and OR Packs has been well
received by most hospitals. A cost evaluation has proven that the cost is
competitive with disposable products.
Position Opportunities:
•
The benefits of other type of products using the transportation system
o Two health regions evaluated the possibility of using the transportation
system to deliver med-surgical supplies. Nothing concrete has resulted.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
•
Developing other quality services for Customers
o Bar swabs were introduced as an alternative to dust towels.
o Sheets were upgraded from a polyester cotton 120 thread count to a better
quality 180 thread count but narrower. (66” from 72”)
o A comfort spread is being evaluated to replace the bedspread and thermal
blanket.
o Information is being gathered on the new micro-fiber mop. A trial will be
set up in early fall of 2004.
•
Operating Room linen pack making services
o Early results are showing this to be a positive addition to the service.
•
Expanding personal linen services to other regions
o The service was expanded into the Twin Rivers Health District, but due to
demands for job creation the service was discontinued.
•
Warehousing and distribution of other disposable products
o A lack of space at the Prince Albert plant has made this project unfeasible
at the present time.
•
Adding other long term care facilities
o Two new facilities have been added; Prince Albert Men’s Home, and the
Parkland Place in Melfort.
•
Assisting health regions achieve their goals to consolidate services
o The light table inspected OR linens and “pack ready” delivery of OR
linens is well received in all but two facilities.
o Consolidation inquires have come in from facilities in two other
provinces.
•
Provide services to other health regions
o With the formation of health regions a couple of areas of service fell under
new authorities. These have given their notice to discontinue NSL services
in July 2004.
o The K-Bro study recommends the expansion of services to the Saskatoon
area.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
Weakness Issues:
•
The financial short term focus on lowest price
o Pricing is still an issue with customers. The charging for lost or damaged
items is viewed as a “new” cost to health care whereas it is a reallocation
as a direct cost to the customer rather than an in-directed cost which
resulted in part to losses on the NSL financial reporting
•
The current shipping system does not meet the current needs
o The introduction of the QUALA linen control system has resulted in an
extreme turn around in this area. Fill rates have increased from 83.8% in
2002/03 to an average of 93.9% in 2003/04. The first three months of
2004 has averaged 97.8%.
•
Shipping in bulk bags results in poor quality
o New customers have requested the cart-exchange system
o One customer discontinued the cart exchange service
•
The Laundry is totally dependant on Customers to control linen stock
o The introduction of the QUALA system has proven its ability to track and
report damaged and lost items. Efforts are continuing to add more items
(uniforms, sheepskin products, and expensive items).
•
The space in the Prince Albert plant
o Space is required for new linen storage and expansion of services
Threat Issues:
•
Meet OR standards for linens and replacement of disposable products
o The Canadian Standards Association regulations for OR linens to be
inspected over a light table before use in an OR theater has been
accomplished for all the user hospitals. The addition of the light table
inspection has resulted in a better product. The QUALA system tracks
each piece and notifies the inspector when specific product requirements
are required. Both of these additions have enabled NSL to meet the OR
standards requirements.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
o Most of NSL customers have a limited knowledge of guidelines and
regulations that impact the delivery of health care products
o The shareholders need to put emphasis within their facilities to secure OR
linens and take advantage of the benefits of linen control
•
Plant space needed to develop more services
o Continues to be an issue
•
Attitude of Customers and employees
o The addition of the Customer Representative person has met with positive
response from the Customers. All the new projects start with Customer
participation and approval. Communication within health regions seem to
be very poor when it comes to laundry issues.
o Employees continue to work with changes to production and Customer
services. Currently the Joint Job Evaluation program committee is
working together.
•
The political environment
o The concept of laundry services provincially wide is under review.
•
Services provided by other laundries and supply companies
Goals
The primary goal of the 1999 Business Plan was a long-term financial plan to restore the
bank and shareholder confidence with longer term goals for customers and staff. In
January 2000, a loan of $740,000 offset the past debts and a monthly pre-billing for
services was established in June 2000 to provide operating funds to support NSL plan for
financial recovery.
The financial projects were in line until 2003. OR linens were upgraded to water proof
fabrics to improve the requirements for patient and staff protection. Hospitals demanded
a 30% increase in inventory which cost $1.3 million. The increased inventory level
should have resulted in better circulation and fill rates, but only increased the inventory
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North Sask Laundry & Support Services Ltd – Business Plan 2004
levels at the customer facilities. The Laundry increased the charge rate from 89.5¢ per
pound to $1.015.
Progress, toward a financially viable position, has been gradual and slower than was
projected. The primary goal of this Plan is to continue building on this the progress.
Based on the review, the following objectives were noted to achieve the primary goal:
Objectives
a) duct dryer intake directly from outside
a. a consulting engineer needs to be hired to investigate this consideration to
reduce static electricity in the plant
b) introduction of new products
a. an evaluation of micro-fiber mop system will be done this fall
c) educate customers on services
a. past efforts to work with customer representatives will continue and the
website will be designed to inform customers
d) establish linen control at customer facilities
a. a computer program is being developed to allow all NSL customers to
track linen used in each facility through the website
e) upgrade computer controls for dryers
a. a capital budget to purchase and install this computer will be presented in
the 2005/06 budget
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North Sask Laundry & Support Services Ltd – Business Plan 2004
THE COMPANY
Origin, structure, service and production concepts have not changed since 1999.
Historical Events and Projects
1999
– Business Plan 1999 was approved
- borrowed $740,000 to satisfy past debts
- introduced pre-billing
2000
- upgrades linen inventory program to be Y2K compliant
- developed Board Governance Policies
2001
- developed new financial reports
2002
- joined the Canadian Collaborative Benchmarking Group
2003
- installed QUALA linen tracking system
- upgraded OR linens
- installed equipment preventative maintenance program
- hired a Customer Representative
2004
- upgraded computer in washing machine
Current Projects
•
developing website for customer interaction
•
introduction of QUALA tracking at each facility
•
evaluation of new mop service
•
introduction of Australian sheepskin products
•
developing process for receipt of goods and service – ACCPAC
•
developing Returned Goods Authorization process – ACCPAC
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North Sask Laundry & Support Services Ltd – Business Plan 2004
Management Profile
The management team is made up of five out of scope positions: General Manager, a
Production Supervisor, a Customer Representative, a Confidential Secretary and a
Clerical Secretary.
Diane Oleynik has held the position of Confidential Secretary since May 1986. Diane is a
Grade 12 graduate of the secretarial course of the Carlton Comprehensive High School in
Prince Albert. Her education also includes courses in basic computer training, data entry,
and ACCPAC modules. She has been previously employed in a variety of jobs from clerk
to assistant manager from 1976 to 1986.
Tammy Wilson has held the position of Clerical Secretary since September 2003. Tammy
is Grade 12 graduate of Kelvington High School with an accounting and office education
through the Kelsey Institute. Her previous employment ranged from clerical to office
management.
Karl Henry has held the position of Production Supervisor in Prince Albert since
February 2004. Karl has been employed by NSL since November 1979 and has worked
in every position of the laundry production and maintenance. He also served as the CUPE
President, shop-steward, and served on numerous committees. Karl is currently enrolled
in the American Linen and Laundry College’s Registered Laundry & Linen Director
Program which should be completed by the fall of 2005.
Lucille Georget has held the position of Customer Representative since April 2003.
Lucille’s former position was as Head of Housekeeping and Laundry for the Wakaw
Hospital for 16 years and as a housekeeper for 18 years. These positions have prepared
her as an ideal candidate to bring together NSL’s goals to improve the service image and
the customer representatives.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
Jim Watchman has held the position of General Manager since April 1996. Jim is a
grade 12 graduate of Sisler High School in Winnipeg, Manitoba. His laundry background
covers 36 years and includes both commercial and institutional operations.
Staffing
The staff are members of CUPE, Local 3637. Current staffing levels are 28 full-time in
Prince Albert and 5 in North Battleford. The current collective agreement ended
December 31, 2003. Both sides have given notice of their intention to negotiate. The
agreement is negotiated separately from the Provincial Collective Bargaining. Two
percent of each payroll is being set aside in a mutual fund to cover retro pay that will be
required when the new contract is negotiated.
The Laundry and staff are currently developing the Joint Job Evaluation requirements.
Funding requirements have been submitted to the Provincial Government to address the
expected costs.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
The Saskatchewan Health Care Market
In August 2002, health districts gave way to a new provincial division of health regions.
The regionalization reduced the shareholders from 11 members to 4. An operational and a
financial individual were added in advisory capacities to assist the Board members. This
also reduced the customer base by 3 that took place in July 2004, a loss of 90,000 pounds
annually.
The Provincial Government commissioned K-Bro Laundry Services of Albert to evaluate
health care laundry services in Saskatchewan in 2001. The report compared costs,
productivity, and services for 3 groups of laundries; centrals, in-house operations, and
personal linens. Both NSL operations were reported as the most efficient providing more
services than other operations.
In June 2003, the Department of Health initiated open discussions at the Minister’s level.
A group of administrators and laundry operational individuals met to make
recommendations based on the report. This group could not come to a consensus. In
2004, The Department hired a conciliator to work with 3 groups; operational, financial,
and governance. The operational group have met to review provincial volumes and
capacity.
Severe Acute Respiratory Syndrome (SARS) outbreak in March 2003 in Toronto and the
increasing incidence necrotizing fasciitis, the flesh-eating bacteria, have brought attention
to the need to protect health-care providers. The Laundry has been involved with
evaluating new textiles and reviewing the ability to meet the demands of an influenza
pandemic. This has been discussed at various levels of health care and laundries have a
role to play.
In-house operations, privatization and disposables continue to be hurdles to expansion of
laundry services. Even though NSL has developed a first class OR linen products, health
regions continue to invest in disposable products.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
FINANCIAL HISTORY
Poundage
Overall poundage continued to decrease at an average of 2% each year until 2003/04
(Appendices: 2). The 2003/04 volume increased by 8.5%. 165,000 pounds was due to
new customers, significantly the addition of Parkland Place in Melfort. The Quala system
improved fill rates from 83.4% to 95.7% along with establishing checks and balances that
increased the reported poundage by 3.4%. As more customers increase the awareness of
linen controls, the Laundry can expect further decreases in volume. The Saskatoon Health
Region Laundry removed 90,000 pounds annually to their operation in 2004/05.
Personal Linens have experienced the most significant poundage loss from 331,407
pounds in 1999/2000 to 231,526 in 2003/04. The reduction resulted from bed closures,
service reductions, and a new scale installed in December 2002. This kind of loss makes
it more difficult to maintain a reasonable price.
Revenue
While poundage was decreasing, the revenue increased 21% to 2002/03 and then by
another 27% in 2003/04 (Appendices: 3). Due to the losses in the 2002/03 year the rate
was increased to $1.015 per pound. The Quala system added an additional $85,465 to
revenue for lost and damaged items. Personal linen revenues increased by 4% over the 5
year period while interest revenues increased by 239% and miscellaneous sales dropped
by 37%. Customer returned goods for credit have decreased from an average of 8,533
pounds in 2002 to 955 pounds in 2004.
Expenses
While revenues grew by 21%, expenses increased by 27% over the same period. Linen
replacement, salaries and benefits, wash chemicals, housekeeping supplies and utilities
were main contributors to this increase. A $700,000 increase to linen was budgeted for
2002/03 to upgrade OR linens. The final cost was $1.3 million between 2002 and 2004.
The increase was 61% over the 5 years. Salaries and benefits increased by 29% over this
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North Sask Laundry & Support Services Ltd – Business Plan 2004
period. Three new positions were established in 2002 to train employees on the Quala
system and light table inspection. The collective agreement was negotiated in 2002 which
accounted for retro pay out of $115,000 and wages over three years increases of 2% each
year until December 31, 2003. Both wash chemicals and cleaning supplies had a 42%
increasing in pricing. Wash chemicals also increased due to new products required for the
new materials. The biggest increase in utilities came from gas prices which increased
almost 30% in one year.
Cash Flow
Cash flow (Appendices: 4) steadily increased for the first three years of the 1999
Business Plan. The set back in the forth year was due to the linen replacement costs.
However, in the fifth year due to the price increase and the added inventory lost and
damage charges the improvement is back on track.
Financial Ratios
A comparison of ratios from the 1995 to 1999 period and the 2000 to 2004 period is an
acceptable practice to measure the financial performance when similar type business
performance is not available.
Liquidity Ratios (Appendices: 6)
A) Current Ratio
1995-1999
2000-2004
3.06
1.2
2.74
1.82
1.39
1.77
1.13
1.64
0.59
2.15
Current Ratio
The Laundry has steadily
improved its ability to
meet current debts
compared to its current
capital.
3.5
3
2.5
2
1995-1999
1.5
2000-2004
1
0.5
0
1
CONFIDENTIAL INFORMATION
2
3
4
5
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North Sask Laundry & Support Services Ltd – Business Plan 2004
B) Quick Ratio
1995-1999
2000-2004
1.77
0.54
1.66
0.77
0.82
0.92
0.73
0.91
0.42
1.44
Quick Ratio
The Quick Ratio
measures the ability of a
company to meet its
current debt without
having to convert its
inventory into cash.
2
1.5
1995-1999
1
2000-2004
0.5
0
1
2
3
4
5
C) Accounts Receivable Turnover
1995-1999
2000-2004
9.06
9.14
9.9
10.29
7.97
9.73
9.01
9.82
9.12
9.89
Accounts Receivable Turnover
This ratio reports how
many times during the
year the accounts
receivable are turned
into cash.
10.5
10
9.5
9
1995-1999
8.5
2000-2004
8
7.5
7
1
2
3
4
5
Leverage Ratios (Appendices: 7)
A) Total Debt To Assets Ratio
1995-1999
2000-2004
For creditors, a lower
Debt-to-Asset Ratio is
preferred as it
means shareholders
have contributed a large
portion of the funds to
the business, and thus
creditors are more likely
to be paid.
CONFIDENTIAL INFORMATION
0.1
0.41
0.13
0.32
0.44
0.38
0.48
0.39
0.7
0.33
Total Debt to Asset Ratio
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1995-1999
2000-2004
1
2
3
4
5
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North Sask Laundry & Support Services Ltd – Business Plan 2004
B) Debt to Equity Ratio
1995-1999
2000-2004
0.12
4.8
0.15
2.29
0.8
2.0
0.91
51.77
2.37
4.11
Debt to Equity Ratio
Term lenders prefer a
lower debt-to-equity ratio
as it indicates a lower
reliance on creditors and
therefore a greater
capacity for the business
to repay its creditors.
60
50
40
1995-1999
30
2000-2004
20
10
0
1
2
3
4
5
Operating Ratios
A) Return on Assets
1995-1999
2000-2004
9
-19.4
-0.8
13.4
-24.9
6.4
-7
-36.4
-24
17.7
Return on Assets Ratio
30
A higher ratio result than
industry standards usually
indicates an efficient use
of assets.
20
10
0
-10
1995-1999
1
2
3
4
5
2000-2004
-20
-30
-40
B) Return on Investment
1995-1999
2000-2004
10
-112.6
-9.2
44.2
-44.8
19.2
-13.4
-1902.4
-81
90.44
Return on Investment Ratio
This percentage indicates
the return generated on
the capital invested in the
Laundry by the owners.
150
100
50
0
-50
1995-1999
1
2
3
4
5
2000-2004
-100
-150
-200
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North Sask Laundry & Support Services Ltd – Business Plan 2004
C) Net Earnings Margin
1995-1999
2000-2004
7.6
-10.7
-6.6
6.5
-20.5
3.4
-4
-16.66
-12.4
6.5
Net Earnings Margin
10
5
This percentage indicates
how much of each dollar
of sales we convert to
earnings.
0
-5
1
2
3
4
5
-10
1995-1999
2000-2004
-15
-20
-25
Overall, the ratios and percentages indicate an improvement in the Laundry’s financial
picture with the exception of the 2002/03 year, but a quick recovery in 2003/04.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
PRODUCTS AND SERVICES
The shifting of NSL’s focus from the “linen supplier” model to the “support services”
model has met with mixed reactions from the customers. The Quala system has almost
eliminated the short shipments, but most customers are reluctant to trust the accuracy of
the tracking of items that result in loss and damage charges. Three of the objectives (Page
9) of this plan are to improve services.
The Victoria Hospital, which pays the highest cost for lost and damaged goods were
investigating ways to identify where the losses occur. The presentation by Lac Mac Ltd
could be adapted to a website and all NSL customers could access to track barcodes in
their own facilities. This idea was presented to the Board of Directors and a capital
budget was approved. A joint venture was set up between NSL and Lac Mac Ltd to
develop the software. The project will be tested with the Victoria Hospital starting
November 2004. The website will also be developed for online ordering and purchasing.
A trial of Australian Medical Sheepskins was undertaken in the spring of 2004. The
clinical results proved that the product will be a positive contribution to reduce and heal
bedsores. The costing was calculated and a report was presented to the Board.
Presentations will continue at the Regional Boards in the fall of 2004. It was determined
that the initial capital requirement to supply the product was too high for the Laundry.
The Health Regions will be asked to partnership with NSL to purchase the necessary
inventory. A trial of micro-fiber mops has been scheduled for the fall of 2004. Improved
products (comfort spread, bar wipes, and scrubs) are being tested for customer approval.
Although there are more operating room linens in circulation than ever before, customer
satisfaction has not improved. The two largest customers of OR linens continue to reinspect the delivered product. Individuals have individual quality requirements with little
agreement between facilities. NSL will develop a catalogue identifying what is
acceptable and what’s not based on the Canadian Standards Association and the OR
Nursing Associations. Based on our discussions with other recyclable OR linen service
providers, NSL is providing a first class product.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
The upgrade to water proof OR linens has enabled the Laundry to meet all the current
requirements to protect both hospital staff and patients. Some changes to procedures had
to be made to address blood fluids on the floor during some operations or deliveries. NSL
staffing adjusted to the processing changes with a positive response.
Other issues identified in the 1999 Marketing Plan continue to be issues. Some of these
issues are:
a) space to develop new services
b) unaccountable losses
c) untapped volume potential in both the west and east service areas
d) increasing use of disposable products
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North Sask Laundry & Support Services Ltd – Business Plan 2004
THE FINANCIAL PLAN
Poundage
Since 1994, laundry volumes have decreased by an average of 2.4% per year primarily in
the
acute
care
services.
Total Poundage
the long-term care services
have seen the same decrease.
This percentage is expected to
increase
as
North
Sask
Laundry
introduces
more
linen control methods to its
poundage
(thousands)
However, from 1999 to 2003
4,500
4,300
4,100
3,900
3,700
3,500
2000/04
2005/09
1
2
3
4
5
Years
customers. The loss in customer base and customers using in-house laundry facilities will
impact this loss dramatically in the first couple of years of this plan. (Appendices: 9)
Financial Forecast
With poundage dropping below 4.0M pounds in the second year, as experienced in the
2002/03 year, the operation will struggle to maintain efficient productive. The best break
even production objective should be 4.8 to 5.5M annually. As production decreases, fixed
costs (administrative and service cost) consume a higher percentage of the overall costs.
Price will increase by 13.5% over the next five years. This trend can be offset by a strong
restraint program and/or the addition of poundage. Increasing the productivity of wash
system, replacing two small piece folders, and reducing the new linen inventory should
reduce this by 5.5%. The addition of poundage could offset the pricing for 100,000
pounds by 3.4%, 200,000 pounds by 4.7%, and 300,000 pounds by 6.5%.
Energy, chemical, and linen prices are expected to increase significantly in the years
ahead. However, the loan for linens (2005/06) and the long-term loan (2008/09) will be
repaid. Generally expenses are expected to increase by 2% per year.
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North Sask Laundry & Support Services Ltd – Business Plan 2004
Capital Requirements
The plan identifies the following capital requirements over the time period:
a) upgrade to the washer computer (2004/05: $75,000)
b) upgrade to the dryer and shuttle computer (2005/06: $55,000)
c) replacement of 2 small piece folders (2006/07: $60,000)
d) replacement of the single-stage press (2008/09: $150,000)
Impact on Balance Sheet
Assets and Equity continue to improve. Fixed asset value and long-term debt continue to
decrease. Increasing the linen inventory and the Quala tracking system have improved the
overall services. Linen replacement is budgeted at 20¢ per pound and will cause the linen
inventory value to decrease over the plan period. The reserve is maintained to provide
flexibility and meet un-expected financial requirements.
Impact on Cash Flow
The cash flow statement converts the accrual basis of accounting used to prepare the
income statement and balance sheet back to a cash basis. It is important to analyze the
actual level of cash flowing into and out of the business. Like the income statement, the
statement of cash flow measures financial activity over a period of time. The cash flow
statement also tracks the effects of changes in balance sheet accounts. The impact on cash
flow is more aggressive than in the past. The improvement is impacted by reducing
inventory levels and the retirement of the long-term debt.
CONFIDENTIAL INFORMATION
Page 22
North Sask Laundry & Support Services Ltd – Business Plan 2004
Financial Ratios Projections
Liquidity Ratios
Current Ratios
The financial plan continues to
strengthen the liquidity of NSL that
the 1999 Plan established. The
Current Ratio and Quick Ratio
measures the Laundry’s ability to
pay its creditors. The Quick Ratio
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1995/99
2000/04
2005/09
1
2
4
5
Quick Ratio
meets its current debt without
having to convert its inventory into
3
3
cash. The Accounts Receivable are
2.5
2
1995/99
budgeted at 1/12 the total sales so
1.5
2000/04
1
2005/09
the Accounts Receivable Turnover
Ratio is a consistent 11.85.
0.5
0
1
2
Leverage Ratios
These ratios measures whether or
not the Laundry has sufficient
resources to provide for interest and
principal payments as they come
3
4
5
Debt to Assests Ratio
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
due. The Laundry is still recovering
1995/99
2000/04
2005/09
1
2
from the deficit in 2002-2004, but
3
4
5
Debt to Equity Ratio
the future projects a decrease in
10
debt that was formulated in the
8
1999 Plan.
6
1995/99
2000/04
4
2005/09
2
0
1
CONFIDENTIAL INFORMATION
2
3
4
5
Page 23
North Sask Laundry & Support Services Ltd – Business Plan 2004
Operating Percentages
Return on Assets Percentage
These percentages show a
60
decline as the profits are at
40
a break even point. A
20
1995/99
0
2000/04
portion of the returns is
being
transferred
to
1
-20
a
-40
reserve that results in a
-60
the
percentage.
These percentages indicate
4
5
2005/09
150
100
50
1995/99
0
that the charge rate is not
-50
too high.
3
Return on Investment Percentage
reduction in the net earnings
lowers
2
1
2
3
4
5
2000/04
2005/09
-100
-150
-200
Net Earnings Margin Percentage
15
10
5
0
-5
1995/99
1
2
-10
3
4
5
2000/04
2005/09
-15
-20
-25
Conclusion
This Plan continues to produce a viable and solid financial position while planning for the
replacement and upgrade of equipment that has made the Laundry a productive plant. The
Laundry has established the ground work in establishing a first class service. These
factors will project NSL with an optimistic future. The full extent of the Quala System
has not been realized which will become one of the objectives to improve services as
customers become involved with controlling laundry costs. A stronger financial position
will restore the bank and shareholder confidence.
CONFIDENTIAL INFORMATION
Page 24
APPENDICES
Board of Directors
Howard Gange, Chairperson
Prince Albert Parkland Health Region
Bonnie O’Grady, Vice-chair
Prairie North Health Region
Steve Rudy
Kelsey Trail Health Region
Charlene Logan
Mamawetan Churchill River Health Region
Resources
Irene Denis
Prairie North Health Region
Morgan Kennedy
Prince Albert Parkland Health Region
Appendices: 1
Poundage Comparison
2000
2001
2002
2003
2004
4,209
4,109
4,036
3,962
4,298
Poundage
Pounds (000)
4,500
4,300
4,100
3,900
3,700
3,500
1
2
3
4
5
Years
Keewatin Yahtte Health Region
Kelsey Trail Health Region
Mamawetan Churchill River Health
Region
Prairie North Health Region
Personal Linens
Prince Albert Parkland Health Region
Saskatoon Health Region
Other
32,463
554,617
42,233
551,259
44,904
542,749
41,066
520,654
43,653
695,484
110,744
1,394,014
331,407
1,686,802
98,642
114,909
1,383,747
312,409
1,616,655
88,106
4,208,689
4,109,318
116,703
1,361,510
301,024
1,579,109
87,329
2,967
4,036,295
122,315
1,338,080
271,187
1,579,803
86,287
2,823
3,962,215
125,586
1,411,842
231,526
1,688,175
98,507
2,821
4,297,594
Keewatin Yahtte Health
Region
Kelsey Trail Health
Region
Pounds
Poundage
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Mamawetan Churchill
River Health Region
Prairie North Health
Region
Personal Linens
Prince Albert Parkland
Health Region
1
2
3
4
Health Region
5
Saskatoon Health Region
Other
Appendices: 2
Income/Expense Comparison
Worksheet: Statement of Operations Comparisons/Projections
Mar 31/99
Revenue
Laundry Services
2,372,102
Personal Linen Servi 250,484
Invest Income
536
Damaged & Lost
Insurance Claim
54,332
Delivery Service
Other
Misc Sales
15,434
Mar 31/00
Mar 31/01
Mar 31/02
Mar 31/03
Mar 31/04
2,648,398
283,692
725
0.12 3,137,588
0.13 272,331
0.35
4,126
0.18 3,192,052
-0.04 265,458
4.69
5,244
0.02 3,298,512
-0.03 248,002
0.27
6,359
0.03 4,127,551
-0.07 293,783
0.21
2,457
85,465
10,005
-0.35
5,753
-0.42
4,416
-0.23
6,460
0.46
6,316
5 year
Average
Inc/Dec
0.25
0.18
-0.61
-0.02
2004/05
2005/06
2006/07
2007/08
2008/09
0.121 4,263,393 4,256,621 4,170,164 4,182,316 4,211,264
0.037
348,272
40,590
0
0
0
0.983
6,166
4,896
4,500
4,500
4,500
97,305
36,000
36,000
36,000
36,000
-0.114
3,432
18,023
33,758
3,500
8,000
3,500
8,000
3,500
8,000
3,500
8,000
2,692,888
2,942,820
0.09 3,419,798
0.16 3,467,170
0.01 3,559,333
0.03 4,515,572
0.27
0.113 4,770,349 4,349,608 4,222,164 4,234,316 4,263,264
Expense
Salaries
1,334,245
Administration
26,888
Rent
22,656
Other Administration
37,421
Supplies - Mending
45,471
- Shipping
36,161
- Washing
49,332
Linen Replacement
510,035
Housekeeping
4,372
Physical Plant
62,398
- Insurance
10,065
4,506
Printing, postage, & s
Repair/Mtnce
93,955
- other
120,950
Telephone
8,216
Transportation
423,352
13,582
Travel & convention -s
2,256
Utilities
106,080
Loan Interest
21,026
1,444,587
26,494
23,565
37,118
36,695
39,415
44,355
598,896
4,832
87,446
10,181
5,180
84,085
57,837
8,998
438,509
11,556
4,854
106,094
23,997
0.08 1,415,415
-0.01
32,941
0.04
24,559
-0.01
22,520
-0.19
19,012
0.09
27,296
-0.10
52,749
0.17 471,089
0.11
8,408
0.40 106,923
0.01
10,481
0.15
5,102
-0.11 102,540
-0.52 113,269
0.10
12,245
0.04 463,416
-0.15
12,574
1.15
5,433
0.00 101,164
0.14
52,321
-0.02 1,466,700
0.24
25,702
0.04
24,165
-0.39
21,000
-0.48
12,795
-0.31
42,091
0.19
47,088
-0.21 561,841
0.74
7,919
0.22 124,431
0.03
10,324
-0.02
6,748
0.22
92,532
0.96 123,857
0.36
7,669
0.06 465,172
0.09
12,759
0.12
6,205
-0.05 114,197
1.18
35,024
0.04 1,829,482
-0.22
21,609
-0.02
24,491
-0.07
23,582
-0.33
14,359
0.54
42,353
-0.11
54,263
0.19 1,055,796
-0.06
13,939
0.16 106,175
-0.01
11,594
0.32
6,912
-0.10
74,563
0.09
62,829
-0.37
9,342
0.00 482,841
0.01
8,193
0.14
14,832
0.13 111,772
-0.33
29,297
0.25 1,857,357
-0.16
34,083
0.01
25,436
0.12
33,043
0.12
19,848
0.01
38,409
0.15
81,307
0.88 964,608
0.76
15,906
-0.15 138,527
0.12
15,394
0.02
7,227
-0.19
80,092
-0.49
60,674
0.22
8,400
0.04 514,970
-0.36
10,586
1.39
4,147
-0.02 121,401
-0.16
34,401
0.02
0.58
0.04
0.40
0.38
-0.09
0.50
-0.09
-0.12
0.30
0.33
0.05
0.07
-0.03
-0.10
0.07
0.29
-0.72
0.09
0.17
0.072 1,981,582 1,813,949 1,850,228 1,887,232 1,924,977
0.085
37,705
38,107
38,869
39,646
40,439
0.024
25,376
25,884
100
100
100
0.011
38,165
57,123
56,928
57,437
57,956
-0.099
7,337
7,484
7,634
7,786
7,942
0.048
25,946
19,465
19,854
20,251
20,656
0.126
89,817
86,164
87,875
89,621
91,401
0.189
825,286
812,942
790,553
774,503
758,786
0.285
16,000
16,320
16,646
16,979
17,319
0.189
163,017
166,278
169,603
172,995
176,455
0.095
16,218
16,542
16,873
17,211
17,555
0.105
6,649
6,782
6,918
7,056
7,197
-0.021
35,353
73,598
75,070
76,571
78,103
0.001
4,757
62,300
63,546
64,817
66,113
0.040
10,791
8,732
8,907
9,085
9,267
0.040
542,571
533,592
536,104
546,826
557,763
-0.022
8,123
15,086
15,388
15,695
16,009
0.417
12,950
12,000
12,240
12,485
12,734
0.029
188,813
169,589
172,981
176,441
179,970
0.200
26,448
13,936
10,722
10,722
10,722
2,932,967
3,094,694
0.06 3,059,457 -0.01 3,208,219
0.05 3,998,224
0.25 4,065,816
0.02
0.071 4,062,904 3,955,872 3,957,038 4,003,460 4,051,464
Operational Surplus/(De -240,079
Depreciation
162,100
Reserve Account
66,612
-468,791
Non-Operational
Principal Payment
80,074
-151,874 -0.37
163,572 0.01
102,410 0.54
-417,856
360,341 -3.37
138,235 -0.15
-30,993 -1.30
253,099
275,222
2.44
47,377
Net Surplus/(Deficit)
-548,865
-693,078
0.26
205,722 -1.30
Poundage
Acute Care
Personal Linen
Long Term Care
Health Centres
Other
2,864,502
362,542
1,499,370
3,223
53,488
2,502,270
331,407
1,320,877
5,075
48,770
4,783,125
4,208,398 -0.12 4,111,112 -0.02 4,036,493 -0.02 3,957,888 -0.02 4,295,088
-0.83
258,951 -0.28
139,830 0.01
-200,962 5.48
320,083
-438,891 -2.69
151,490 0.08
92,953 -1.46
-683,334
449,756 -2.02
154,066 0.02
-32,013 -1.34
327,703
171,158
64,673
0.37
105,688
0.63
255,410
0.24
-789,022 -4.09
-1.748
-0.007
0.382
707,445
164,168
43,491
499,786
393,736
144,378
40,647
208,711
265,127
119,065
39,528
106,534
230,856
83,345
38,725
108,786
211,800
58,342
37,939
115,519
0.62
0.646
187,414
191,074
93,871
96,245
107,014
156,545 -1.20
-1.216
312,372
17,637
12,663
12,541
8,505
-0.13 2,447,720 -0.02 2,396,894 -0.02 2,331,416 -0.03 2,446,413 0.05
-0.09
312,409 -0.06
301,024 -0.04
271,187 -0.10
231,526 -0.15
-0.12 1,286,606 -0.03 1,272,895 -0.01 1,280,269 0.01 1,541,338 0.20
0.57
10,238 1.02
10,509 0.03
12,461 0.19
1,699 -0.86
-0.09
54,139 0.11
55,172 0.02
62,557 0.13
74,113 0.18
Cost per Pound
0.6777
0.8640
0.7818
0.7957
Charge Rates
Personal Linens
60¢
78¢
74¢
83¢
85¢
84¢
86¢
85¢
1.0987
89.5¢
87¢
1.0149
98.5¢
$1.015
0.09
-0.029 2,452,599 2,403,547 2,355,476 2,308,366 2,262,199
-0.085
230,702
30,000
0.011 1,621,754 1,589,319 1,557,533 1,526,382 1,495,854
0.188
11,480
10,906
10,361
9,843
9,351
0.072
32,569
30,940
29,393
27,924
26,527
-0.019 4,349,104 4,064,712 3,952,763 3,872,515 3,793,931
Cost/pound
Charge Rates
1.0250
1.0202
1.0248
1.0587
1.0961
$1.0350
$1.3200
$1.0550
$1.3530
$1.0550
$1.0800
$1.1100
Appendices: 3
Balance Sheet Comparison
Balance Sheet Comparisons/Projections
Mar 31/00
Assets
Current
Cash
Bank
Bank Reserve
Accounts Receivable
Inventory
Prepaid expenses
Property & Equipment
Building
Depreciation
Equipment
New Equipment
Additions/Deletions
Depreciation
Current Period
Liabilities
Current
Bank Line of Credit
Accounts Payable
Loan Payment
Equity
Share Capital
Reserve for Capital
Reserve for Salaries
Current Period
Retained Earnings
Current Period
Mar 31/02
Mar 31/03
Mar 31/04
100
100
100
100
100
0
330,881
443,997
24,172
799,150
30,993
351,754
544,961
20,257
948,065
231,955
399,850
597,575
17,241
1,246,721
139,001
412,164
458,111
24,873
1,034,249
171,015
600,133
392,536
30,377
1,194,161
826,325
704,260
620,076
585,795
476,079
Inc/Dec Mar 31/05
Mar 31/06 Mar 31/07 Mar 31/08 Mar 31/09
100
100
100
100
100
163,724
370,383
418,484
576,174
556,292
139,506
125,153
104,681
143,406
31,345
397,529
362,467
351,847
352,860
355,272
698,427
628,584
565,726
509,153
458,238
23,384
23,384
23,384
23,384
23,384
1,422,670 1,510,072 1,464,222 1,605,076 1,424,631
476,079
386,911
297,533
75,000
55,000
60,000
-164,168
386,911
-144,378
297,533
-119,065
238,468
238,468
155,123
150,000
-83,345
155,123
-58,342
246,782
826,325
704,260
620,076
585,795
476,079
1,625,475
1,652,325
1,866,797
1,620,044
1,670,240
421,283
192,125
50,050
663,458
60,489
130,404
55,179
246,072
184,821
162,732
77,780
425,333
233,504
227,471
170,567
631,542
176,637
200,015
178,534
555,186
338,575
187,414
525,989
329,656
191,074
520,730
329,753
93,871
423,624
333,622
96,245
429,867
337,622
107,014
444,636
275,000
278,000
313,900
323,500
355,283
354,718
347,514
348,526
350,939
681,824
629,318
542,044
643,569
464,444
488,204
297,130
203,259
107,014
0
11
11
25,348
5,645
11
176,884
55,071
4
139,001
4
171,015
4
139,506
4
125,153
4
104,681
4
143,406
4
31,345
280,182
471,295
389,454
-107,972
0
156,091
280,193
502,299
621,420
31,033
327,110
156,091
499,786
795,387
655,877
864,589
971,123 1,079,909
208,711
106,534
108,786
115,519
989,746 1,075,808 1,223,319 1,226,777
1,625,475
1,652,689
1,866,797
1,620,044
1,670,240
Payable to Shareholders
Long Term Debt
Loans
Mar 31/01
1,809,581 1,807,605 1,702,690 1,760,200 1,671,413
1,809,581 1,807,606 1,702,691 1,760,199 1,671,413
Appendices: 4
Cash Flow Comparison
Cash Flow Comparisons/Projections
Mra 31/00
Mar 31/01
Mar 31/02
Mar 31/03
Mar 31/04
Net Income -315,446
Depreciation 163,572
Disposal of Fixed Assets
Reserve transfer (net)
-151,874
Changes in Capital Accounts
Account Receivable -17,893
Inventories -121,217
Prepaid Expenses
-6,916
Unearned Income
Accounts Payable/Accruals -126,232
-424,132
Financing Activities
Advances long-term debt
Payment of Long-Term Debt -275,222
Redemption of Share Capital
New Long Term Financing 740,000
Issuance of Shares
Transfer to/from Equipment Reserve
464,778
Investment Activities
Purchase of Fixed Assets -70,570
Proceeds from Disposal of Fixed Assets
-70,570
222,106
138,235
-
119,121
139,830
-
-590,381
151,490
-
296,076
154,066
-386
360,341
258,951
-438,891
-20,873
-100,964
3,915
275,000
-62,085
455,334
-48,097
-52,614
3,016
3,000
32,693
196,949
-12,314
139,465
-7,632
35,900
64,740
-218,732
-47,377
-47,377
-64,673
-64,673
-16,170
-16,170
-29,924
Mar 31/05 Mar 31/06 Mar 31/07 Mar 31/08 Mar 31/09
Operating Activities
449,756
499,786
164,168
-31,509
632,445
208,711
144,378
-14,353
338,736
106,534
119,065
-20,472
205,127
108,786
83,345
38,725
230,856
115,519
58,342
37,939
211,800
-187,969
65,575
-5,504
9,600
-27,456
304,002
202,604
-305,891
6,993
31,783
138,560
706,494
35,062
69,843
0
-564
-8,919
434,157
10,620
62,858
0
-7,205
97
271,498
-1,013
56,573
0
1,013
3,868
291,297
-2,412
50,915
0
2,412
4,000
266,716
194,305
-171,158
-171,158
-187,414 -223,371
6,166
4,896
-181,248 -218,475
-93,871
4,500
-89,371
-96,245 -107,014
4,500
4,500
-91,745 -102,514
-55,646
-55,646
-117,209
92,953
-24,256
-43,961
-43,961
-75,000
-75,000
-55,000
-55,000
-60000
-60,000
- -150000
0 -150,000
391,787
76,630
-48,683
88,883
450,247
160,683
122,127
199,552
14,202
Beginning of Year -391,259
End of Year -421,183
-421,183
-29,396
-29,396
47,234
-184,721
-233,404
-233,404
-144,521
-144,521
305,726
305,726
466,408
466,408
588,535
588,535
788,087
788,087
802,289
Cash
100
Reserve Account
0
Bank -421,283
-421,183
100
30,993
-60,489
-29,396
100
231,955
-184,821
47,234
100
100
32,014
-176,637
-144,523
100
139,506
166,120
305,726
100
125,153
341,155
466,408
100
104,681
483,754
588,535
100
143,406
644,581
788,087
100
31,345
770,844
802,289
Increase/Decrease in Cash Resources
300,000
-105,688
-7
-
Cash Resources
Cash Represeted by
-233,504
-233,404
Appendices: 5
Financial Ratios
Liquidity Ratios
2000
2001
2002
2003
2004
Current Ratio (Working Capital
Ratio)
1.2
1.82
1.77
1.64
2.15
provides a measure of the ability of the laundry to meet its current debt. The ratio
(current assets/current liabilities) is an indication of the current assets which are
available to cover the current liabilities (due within the next 12 months). The
Current Ratio indicates whether the business has ample working capital used
to meet short-term obligations, quickly take advantage of opportunities, and qualify
for favorable credit terms. The 1999 ratio was .59.
A Current Ratio of 1.0 or greater is considered acceptable for most businesses.
Other factors need to be considered before drawing conclusions from the Current
Ratio such as how quickly current assets can be converted into cash, and the
credit terms extended by suppliers and to customers. A high ratio (greater than 2)
indicates excessive current assets in the form of inventory, and underemployed
capital. A low ratio (less than 1.0) indicates difficulty to meet short-term financial
obligations, and the inability to take advantage of opportunities requiring quick
cash.
Quick Ratio (Acid Test Ratio)
0.54
0.77
0.92
0.91
1.44
provides a measure of the ability of the Laundry to meet its current debt without
having to convert inventory into cash. The ratio (current assets less inventory/
current liabilities) is an indication of the current assets less inventory which is
available to cover the current liabilities. The quick ratio in 1999 was .42.
The Laundry's ability to pay off the immediate demands of creditors using its most
liquid and current assets; these can be converted quickly into cash, temporary
investments, and marketable securities. It gives a more realistic picture of a
business's ability to repay current obligations. Generally, a Quick Ratio of 1.0 or
greater is considered adequate to ensure a company's ability to pay its current
obligations. A value of less than 1.0 signals a problem in meeting short-term
obligations.
Accounts
Receivable
Turnover
9.14
10.29
9.73
9.82
9.89
indicates how many times during the year the accounts receivable are turned into
cash. The ratio (net sales / average accounts receivable) is an indication of the
quality of the receivables and an idea of how successful the Laundry is in collecting
its outstanding receivables. The 1999 ratio was 8.94.
Measures how liquid accounts receivable are for the year. Average Accounts
Receivable is the average of the opening and closing balances for Accounts Receivable.
Indicates the number of times receivables were turned over during the year. This
result may be considered positive or negative, depending on the industry standard
for companies of similar size and activity. A higher turnover rate generally indicates
less investment in accounts receivable because customers are paying more quickly.
Appendices: 6
Financial Ratios
Leverage Ratios
2000
2001
2002
2003
2004
Total Debt to Assets Ratio
0.41
0.32
0.38
0.39
0.33
(total debt / total tangible assets) measures the portion of the Laundry's total tangible
assets that are financed through debt. The 1999 ratio was .7.
For creditors, a lower Debt-to-Asset Ratio is preferred as it means shareholders have
contributed a large portion of the funds to the business, and thus creditors are more
likely to be paid.
Debt to
Equity Ratio
4.8
2.29
2.0
51.77
4.11
provides a comparison between the amount borrowed from creditors and the amount
invested by the owners. The ratio (total liabilities / adjusted equity) provides an indication
whether the Laundry is over or under capitalized. The 1999 ratio was 2.37.
Measures management's reliance on creditor financing as well as the business's
indebtedness compared to the amount invested by its owners. This ratio indicates the
amount of liabilities the business has for every dollar of shareholders' equity. Because
this ratio is a good indicator of a business's capacity to repay its creditors, it is
considered very important by most term lenders.
The reliance on creditor financing needs to be analyzed in light of other factors such as:
the historical trend of this ratio for the business, industry standards for companies of
similar size and activity, and whether the company is in the start-up or established
phase. Term lenders prefer a lower debt-to-equity ratio as it indicates a lower reliance
on creditors and therefore a greater capacity for the business to repay its creditors.
Appendices: 7
Financial Ratios
Operating Ratios
2000
2001
2002
2003
2004
Return on Assets Percentage
-19.4
13.4
6.4
-36.4
17.7
the percentage (earnings before income taxes / adjusted equity) indicates the effectiveness
of the management in using assets to generate earnings. The 199 ratio was -28.8.
Measures the efficiency of assets used to generate income by the amount of profit
generated for every $100 invested in assets. Income from Operations excludes any
expenses such as income taxes and financing charges. Average Total Assets are used
due to the variation in the amount of assets used by the business.
A higher ratio result than industry standards usually indicates an efficient use of assets.
There are several factors to consider before drawing conclusions from this ratio such as
seasonal variability in sales and whether assets are bought or leased.
Return On Investment
Percentage
-112.6
44.2
19.2
-1902.4
90.44
The percentage (earnings before income taxes / adjusted equity) indicates the return
generated on the capital invested in the Laundry by the owners. The 1999 percentage was -97.1.
Net Earnings Margin Percentage
-10.7
6.5
3.4
-16.66
6.5
the percentage (earnings before income taxes / sales) indicates how much
of each dollar of sales we convert to earnings. The 1999 percentage was -15.1.
It shows the after-tax profit (net income) generated by each sales dollar by measuring the
percentage of sales revenue retained by the company after operating expenses, creditor
interest expenses, and income taxes have been paid.
Appendices: 8
Projections
Poundage (thousands)
Actual
1999/00 2000/01 2001/02 2002/03 2003/04
2,502
2,448
2,397
2,331
2,446
acute care
331
312
301
271
232
personal
1,321
1,287
1,273
1,280
1,541
Long term care
5
10
11
12
2
health centers
49
54
55
63
74
other
4,208
4,111
4,036
3,958
4,295
Total:
Projected
2004/05 2005/06 2006/07 2007/08 2008/09
2,453
2,314
2,267
2,222
2,177
231
30
1,622
1,541
1,464
1,390
1,321
11
11
10
10
9
33
31
29
28
27
4,349
3,926
3,771
3,650
3,534
Poundage
3,000
2,500
2,000
1,500
1,000
500
0
19
99
/0
0
20
01
/0
2
20
03
/0
4
20
04
/0
5
20
06
/0
7
20
08
/0
9
acute care
personal
Long term care
health centers
other
Total Poundage Comparison
poundage
(thousands)
Total Poundage
4,500
4,300
4,100
3,900
3,700
3,500
2000/04
2005/09
1
2
3
4
5
Years
Appendices: 9