Dentaltown New Grad Edition 2020 - 5

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Help Making Sense of
Profit and Loss Statement
A young dentist asks for help calculating the value of a practice that's up for sale

JBNDMD

Evaluating a practice opportunity. I
am two years out of school and considering
ownership, and this is the first practice I have
ever evaluated. Learning as I go but not super
knowledgeable at this stage about things like
this profit and loss statement. Would appreciate any feedback. Does this seem like a healthy
practice and a good opportunity? The retiring
doc is older and so is the practice. Apparently
lots of patchwork dentistry over the years and
only basic services offered, so potentially a lot
of opportunity for growth. I can provide more
info about the practice if needed. ■

Member Since: 04/30/18
Post: 1 of 15

7/28/2020

This is not a healthy practice. This is an underperforming practice that you should not
acquire. I'm curious as to what attracted you to this practice? ■

jasonpatrickwood
Member Since: 01/24/08
Post: 2 of 15

7/28/2020

Take the net income and add back interest expense, depreciation and personal expenses (auto,
meals and entertainment). Salaries and wages look pretty high; is the dentist "salary" included
in this number ($128,970)? If so, you can add the salary portion back. Snowplowing of $7,237
seems pretty high, but maybe that's normal for the area. Telephone expense may include some cell
portion. I doubt your liability insurance would be that high so could add back some of that, too.
Adding all the "addbacks" to the net income gives you an idea of how much the dentist "made."
FWIW, this practice does not appear "healthy" by my standards. Revenue is quite low and
employee salaries and benefits are quite high as a percentage (assuming the doc pay is not part of
this). Coming in as the new guy and lowering employee salary and benefits would not be fun. Is
there an option to just buy the charts? ■

pjmop
Member Since: 02/15/05
Post: 3 of 15

7/28/2020

dentaltown.com \\ NEW GRADS 2020

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5

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Dentaltown New Grad Edition 2020

Table of Contents for the Digital Edition of Dentaltown New Grad Edition 2020

Dentaltown New Grad Edition 2020 - Cover1
Dentaltown New Grad Edition 2020 - Cover2
Dentaltown New Grad Edition 2020 - 1
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Dentaltown New Grad Edition 2020 - Cover3
Dentaltown New Grad Edition 2020 - Cover4
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