0 14-7. (Financial forecasting-discretionary financing needs) The balance sheet of the Boyd Trucking Company (BTC) shows that BTC had sales for the year ended December 31, 2015, of $25 million. The firm follows a policy of Boyd Trucking Company Balance Sheet, December 31, 2015 paying all net earnings out to its common stock- (5 Millions) holders in cash dividends. Thus, BTC generates Current assets $10 Accounts payable $ 5 no funds from its earnings that can be used to expand its operations. (Assume that deprecia- Net fixed assets 15 Notes payable tion expense is just equal to the cost of replacing Total $25 Bonds payable 10 worn-out assets.) Common equity 10 a. If BTC anticipates sales of $40 million Total $25 during the coming year, develop a pro forma balance sheet for the firm as of December 31, 2016. Assume that current assets vary as a percent of sales, net fixed assets remain unchanged, and accounts payable vary as a percent of sales. Use notes payable as a balancing entry. b. How much "new" financing will BTC need next year? c. What limitations does the percent of sales forecast method suffer from? Discuss briefly