Balancing growth, risk, and long-term goals.
Dr. Garcia's dental practice, while successful with a $1.2M gross revenue, has seen a recent increase in operational costs and a dip in profitability. She's worried about the long-term viability of the practice, especially given her reliance on it for retirement income and the significant expense of her children's private school education. A recent equipment failure requiring a costly loan has further strained her financial resources, making her question her ability to retire comfortably.
Using the Altman Z-Score calculator, the advisor assesses the financial health of Dr. Garcia's practice, revealing a concerning score of 1.6, indicating potential financial distress. This prompts a deeper dive using the Debt Service Coverage Ratio calculator to understand her ability to manage debt and the Quick Ratio calculator to evaluate short-term liquidity. Armed with these insights, the advisor recommends strategies to improve profitability, reduce debt, and diversify retirement savings, potentially saving the practice from financial ruin and securing her retirement.
The advisor utilized the Altman Z-Score calculator by inputting Dr. Garcia's practice's financial data, including working capital, total assets, retained earnings, earnings before interest and taxes, sales, and total liabilities. This score, along with the Debt Service Coverage and Quick Ratios, informed the development of a tailored financial plan.
$150,000 increase in net worth within 5 years through debt reduction and diversified investment strategies.
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