1) Forecast the income statement and balance sheet of Blue Sky for 2020 using the above assumptions and the percent of sales method (over the last 2 years). Use your judgement on all other items.

2) What's the disrectionary financing needed (DFN) in 2020? Is it a deficit or surplus?

3) Assume that the interest rate on long-term debt is 5% and that the DFN will be absorbed by the Long-term debt only. Eliminate the DFN using an iterative process.

4) Turn off iteration and use the scenario manger to set up three scenarios:

Worst Case: Sales will increase by 3% in 2020

Base Case: Sales will increase by 10% in 2020

Best Case: Sales will increase by 15% in 2020

Calculate the DFN in each scenario