In the spring of 2013 the Caswell Publishing Company established a custom publishing business for its business clients. These clients consisted principally of small- to medium-size companies in Round Rock, Texas. However, the company’s plans were disrupted when it landed a large printing contract from Dell Computers Corp. (DELL) that it expected would run for several years. Specifically, the new contract would increase firm revenues by 100 percent. Consequently, Caswell’s management knew they would need to make some significant changes in firm capacity, and quickly. The following balance sheet for 2013 and pro forma balance sheet for 2014 reflect the firm’s estimates of the financial impact of the 100 percent revenue growth:

a. How much new discretionary financing will Caswell require based on the above estimates?
b. Given the nature of the new contract and the specific needs for financing that the firm expects, what recommendations might you offer to the firm’s CFO as to specific sources of financing the firm should seek to fulfill itsDFN?

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Caswell Publishing, Inc. Pro Forma Balance Sheet for 2014 Caswell Publishing, Inc. Balance Sheet for 2013 Current assets Net fixed assets 100% $24.000,000 $36.000,000 $60.000.000 $12,000,000 Current assets 18,000000 Net fixed assets Total $30000.000 Total Accounts payable Accrued expenses Notes payable 2,000,000 Accounts payable $ 4,000,000 $ 4,000,000 2,000,000 Accrued expenses 1500000 Notes payable $ 5,500,000 Cuent liabilities 6500,000 Long-term debt $12,000,000 Total liabilities Current liabilities $ 9,500,000 6.500.000 $16,000,000 S 1,000,000 2,000,000 15.000,000 Long-term debt Total liabilities Common stock (par) Paid-in capital Retained earnings 1,000,000 Common stock (par) 2,000,000 Paid-in capital 15.000,000 Retained earnings $18,000.000 Common equity Common equity Total $30000.000 Projected sources of financing S34,000,000 Discretionary financing needs Total financing needs = Total assets