The Optical Scam Company has forecast a sales growth rate of 20 percent for next year. Current assets, fixed assets, and short-term debt are proportional to sales. The current financial statements are shown here:

Sales $ 32,400,000
Costs 28,531,000
Taxable income $ 3,869,000
Taxes 1,354,150
Net income $ 2,514,850
Dividends $ 1,005,940
Addition to retained earnings 1,508,910
Assets Liabilities and Equity
Current assets $ 7,400,000 Short-term debt $ 7,128,000
Long-term debt 3,969,000
Fixed assets 17,872,000
Common stock $ 2,941,000
Accumulated retained earnings 11,234,000
Total equity $ 14,175,000
Total assets $ 25,272,000 Total liabilities and equity $ 25,272,000

a. Calculate the external funds needed for next year using the equation from the chapter. (Do not round intermediate calculations.)
External financing needed $
b-1. Prepare the firm’s pro forma balance sheet for next year. (Do not round intermediate calculations.)

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Assets Liabilities and equity
Current assets $ Short-term debt $
Fixed assets Long-term debt
Common stock $
Accumulated retained earnings
Total equity $
Total assets $ Total liabilities and equity $

b-2. Calculate the external funds needed. (Do not round intermediate calculations.)
External financing needed $
c. Calculate the sustainable growth rate for the company based on the current financial statements. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate?


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