Strategic reinvestment for sustainable medical practice growth.
Dr. Sharma faces the challenge of balancing aggressive student loan repayment (currently $280,000) with the need to reinvest in her growing medical practice. She wants to expand her services by adding a new diagnostic machine costing approximately $100,000, but is unsure how much of her current profits to retain versus allocating to debt repayment. This uncertainty hinders her ability to make confident investment decisions for her practice's future.
Using the Retention Ratio Calculator, Dr. Sharma analyzed her practice's earnings and identified that retaining 60% of her net profit would allow for the $100,000 equipment purchase while still allocating a significant portion to debt repayment and personal savings. Further analysis with the Debt-to-Asset Ratio Calculator demonstrated that this level of investment maintained a healthy balance sheet, assuaging concerns about over-leveraging the business. Using the Tax Equivalent Yield Calculator, Dr. Sharma could then compare returns on investment within the practice against other potential investment options.
The Retention Ratio was calculated using the practice's net income and dividends paid to Dr. Sharma, providing a clear percentage of earnings reinvested in the business.
$25,000 increased annual revenue projected from new diagnostic equipment.
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