Here are three examples in which clients of Lagerquist Accounting & Advisory achieved improved profitability as a result of new strategies:
A surgical center wanted to determine the minimum facility fee it should charge for cosmetic surgery. In order to accomplish this, the firm analyzed the center’s fixed and variable costs. It was determined that variable costs were approximately 50% of revenues. Using a break-even analysis formula, Lagerquist Accounting & Advisory was able to calculate how much the per hour facility fee should be to ensure its fixed and variable costs were covered and that the facility generated a profit. This analysis enabled the center to present its patients with a cosmetic surgery option which was considerably less expensive than hospital rates while generating additional profits for the center.
A pediatric dentistry practice, operating 4.5 days per week, began to experience significant growth which quickly brought the practice to capacity. To expand capacity without increasing the fixed costs, the firm recommended extending hours to evenings and Saturdays. After analyzing the variable costs, Lagerquist Accounting & Advisory estimated that variable costs were 50%. This meant that for every additional hour the office could open, approximately 50% of the additional revenues would go straight to the bottom line.
Parking Management Company
Despite increasing revenues from expanding operations, this business was becoming less profitable. Lagerquist Accounting & Advisory was asked to identify why this was happening. The business manages several parking locations in the Washington DC metropolitan area. The company employs around 50 people and revenues are in the $5 million range.
To find out why profits were decreasing despite increasing revenues, the firm first determined if the right information was available. The client’s QuickBooks system was reviewed and changes were made to gather and manage direct revenues and expenses by location, along with centralized overhead costs.
Quarterly reporting now allows the client to review the performance of each location to assure that enough revenue is generated to cover direct expenses and the location’s share of the overhead costs. When a location begins falling behind on covering direct and overhead costs, management takes action to either increase revenues or decrease costs as needed to assure profitability.
Each of these clients benefited from the Bookkeeping & Accounting services offered by Lagerquist Accounting & Advisory, as well as the firm’s powerful Outsourced CFO capabilities. Learn more about the full range of Expertise available.