1. Calculate external financing needs (EFN) using the formula below.

EFN=Assets/SalesSales-Spontaneous liabilities/SalesSales-PMProjected sales(1-d)

Assets/Sales
Sales
- Spontaneous liabilities/Sales
Sales
- PM
Projected sales
(1-d)
= EFN

2. Calculate the internal growth rate for TTC using the following formula:

Internal growth rate = ROAb/1-ROAb

What does this growth rate represent?

3. Calculate the sustainable growth rate for TTC using the following formula:

Sustainable growth rate = ROEb/1-ROEb

What does this growth rate represent?

4. Assuming all external financing needs are met by issuing long-term debt, what will be the new total debt ratio for TTC? Do you think TTC can manage this increased debt load? Use the results of your financial ratio analysis to support your conclusion

	2020 Income 2021 Pro Forma Income
Sales	$3,378,810	$675,762.0
Costs	-2,971,740	($594,348.0)
Taxable income	$407,070	$81,414.0
Taxes	-77,369	($15,473.8)
Net income	$329,701	$65,940.2
Dividends	-107,698	($21,539.6)
Addition to retained earnings	-----
	2020 balance Sheet 2021 Pro Forma Balance
Cash	$479,892	$95,978.40
Accounts receivable	261,135	$52,227.00
Inventory	652,433	$130,486.60
Other current assets	34,188	6837.6
Total current assets	$1,427,648	$285,529.60
Net plant and equipment	467,919	93583.80
Other long-term assets	957,661	191532.2
Total assets	$2,853,228	$570,645.60
Accounts payable	363,953	72790.6
Accruals	331,971	66394.2
Total current liabilities	$755,924	$151,184.80
Long-term debt	791,123
Long-term lease liabilities	66,641
Other long-term liabilities	124,712	24942.4
Total long-term liabilities	$982,476	$196,495.20
Common stock	107,583
Other equity	-34,262
Retained earnings	1,041,507
Total stockholders equity	$1,114,828	$222,965.60
Total liabilities and stockholders' equity	$2,853,228	$570,645.60
External financing needs (EFN)	-----