Good Margins Dental Accounting - EBITDA Verification

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 Earnings Before Interest Taxes Depreciation and Amortization or  EBITDA is a term used to evaluate a company’s performance both operating  and financial. It is calculated by taking income minus operating  expenses (not including the mentioned Interest, Taxes, Depreciation, and  Amortization as these are not operating expenses). EBITDA helps to  determine how well the company uses its resources to generate profits.  EBITDA is often used to determine a company’s value and  creditworthiness.  

• 2 to 3% of the transactions from the review  period are randomly selected for each general ledger account and then  compared to the supporting documentation for the transaction.
• Month over month Profit and Loss statements are reviewed for reasonable consistency for the period under review. 
• A comprehensive review of all transactions on the Profit and Loss  statement are reviewed for consistency of income and expense allocation  by vendor for the period under review. 
• Production and collection reports are compared with general ledger  reports and Profit & Loss reports to verify revenue for the period  under review and variance percentage is reported.  
• Payroll periods are randomly selected for each business or business  segment by comparing payroll register and liability reports to the  entries in the general ledger verifying accurate reporting in the  general ledger.
• Bank and Credit  Card statements are randomly selected from each account for the review  period and then verified with the general ledger.
• Previous years' tax returns for each business are compared to financial  statements to verify accuracy. Various expenses are compared from  financial reports with the tax returns, and Income on tax returns is  compared to financial statements. 

 A summary of findings report is provided reporting on the above  actions giving an option whether there are material misstatements and on  the reason-ability of the income and expense totals presented. 

To start a Verification project, Good Margins CFO will require the following documents: 

• The most recent federal tax returns for each business. 
• Bank and credit card statements for each month of the period under review.
• Loan statements for the period under review. 
• Payroll records for the period under review via excel format or PDF  including payroll journal, liability report and check register from the  payroll processing company or access to the payroll processing company  system to download reports.
• Production, deposit, and collection reports from production software for the period under review if applicable. 
• List of any special requirements or forms needed to be considered for the project. 
• Organizational chart of practices, management company and/or organizations.
• Access to, accountant copy or back of accounting system as of the  closing date of the review period. This would eliminate the need for the  below item: 

1. Financial  Statements for the period under review (Balance Sheet and P&L  Statements) via excel format, financials should be sent via month over  month view
2. Detailed report of any owner withdrawals or investments into the company for the period under review 
3. Detailed General Ledger report for the period under review. 
4. Bank & credit card reconciliation reports for each of the statements provided above. 

 In need of a EBITDA Verification report? Book an appointment with a Michelle today.