Calculator for Allowable Profit for For-Profit Agencies Which Provide Client Care

Wis. Stat. 46.036 (3) (c) indicates that contracts for proprietary agencies may include a percentage add-on for profit according to the rules promulgated by the department.  These requirements are in the Allowable Cost Policy Manual, which indicates that allowable profit is determined by applying a percentage equal to 7 1/2% of net allowable operating costs plus 15% applied to the net equity, the sum of which may not exceed 10% of net allowable operating costs. Net equity is defined as the cost of equipment, cost of buildings, cost of land and cost of fixed equipment less accumulated deprecation and long term liabilities. The average net equity for the year shall be used.

We developed a calculator in Excel format which can be used to calculate the allowable profit for a for-profit agency which provides client care.  We would appreciate feedback on how well this method works.

Allowable profit calculator (excel format)
Allowable profit calculator (PDF, 11 KB)

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Last Revised:  October 17, 2006