1. Stirbucks Corporation is projecting 18% sales growth for 2020. Use the 2019 income statement below to prepare a pro-forma income statement for 2020. Assume that all costs vary with sales and that the firm has a constant dividend payout ratio. Indicate the projected addition to retained earnings.

Stirbucks Income statement 2019
Sales	$250,000
Costs	$165,000
Taxable income	$85,000
Taxes (34%)	$28,900
Net income	$56,100
Dividends	$25,000
Addition to R/E	$31,100

2. Use the income statement above (to account for retained earnings) and the balance sheet below to prepare a proforma balance sheet for Stirbucks Corporation based on the same 18% increase in sales growth for 2020. Assume that all asset accounts and accounts payable increase with sales. We would not expect any change in any of the other accounts.

a. Calculate external financing needed (EFN), if any, for 2020.

b. Indicate possible sources of financing (i.e. what accounts on the balance sheet would change to account for this extra financing?).

Stirbucks Balance Sheet 2019
Assets		Liabilities & Owners' equity
Current assets		Current liabilities
Cash	$27,500	Accounts payable	$12,000
A/Receivable	$52,000	Notes payable	$38,000
Inventory	$61,500
Total c. assets	$141,000	Total current liabilities	$50,000
Fixed assets
Net PPE	$180,000	Long-term debt	$135,000
		Owners' equity
		Common stock	$120,000
		Retained earnings	$16,000
		Total equity	$136,000
Total assets	$321,000	Total Liabilities & equity	$321,000