16. Problem 15 in Chapter 3 asks you to construct a veyear nancial projection for Aquatic Supplies beginning in 2022. Based on your forecast or the suggested answer available through McGraw-Hill's Connect, answer the following questions, a. Calculate the company's timesinterestearned ratio for each year from 2021 to 2026. b. Calculate the percentage EBIT can fall before interest coverage dips below 110 for each year from 2021 to 2026, c. Consulting Table 6.5 in the text, What bond rating would Aquatic Supplies have in 2021 if the rating was based solely on the rm's interest coverage ratio? (1. Based on this rating, would a signicant increase in nancial leverage be a prudent strategy for Aquatic Supplies? AQUATIC SUPPLIES CO. INCOME STATEMENT ($ millions) Actual Forecast 2021 2022 2023 2024 2025 2026 Sales 582.762 652.693 731.017 818.739 916.987 1,027.026 Cost of Goods Sold 240.828 254.550 285.096 319.308 357.625 400.540 Gross Profit 341.934 398.143 445.920 499.431 559.362 626.486 Selling, General, & Administrative Exp. 257.507 319.820 358.198 401.182 449.324 503.243 Operating Income Before Deprec. 84.427 78.323 87.722 98.249 1 10.038 123.243 Depreciation & Amortization 25.221 29.371 32.896 36.843 41.264 46.216 Operating Profit 59.206 48.952 54.826 61.405 68.774 77.027 Interest Expense 16.430 18.636 18.801 18.841 18.733 18.446 Pretax Income 42.776 30.316 36.025 42.564 50.041 58.581 Total Income Taxes 14.971 10.611 12.609 14.897 17.514 20.503 Net Income 27.805 19.705 23.416 27.667 32.527 38.078 BALANCE SHEET ($ millions) Actual Forecast 2021 2022 2023 2024 2025 2026 ASSETS Cash & Equivalents 7.152 13.054 14.620 16.375 18.340 20.541 Account Receivable 70.538 84.850 95.032 106.436 119.208 133.513 Inventories 39.033 32.635 36.551 40.937 45.849 51.351 Prepaid Expenses 9.339 9.339 9.339 9.339 9.339 9.339 Other Current Assets 27.076 39.162 43.861 49.124 55.019 61.622 Total Current Assets 153.138 179.039 199.403 222.211 247.756 276.366 Net Property, Plant, & Equipment 81.648 97.904 109.652 122.811 137.548 154.054 Intangible Assets 9.415 9.415 9.415 9.415 9.415 9.415 Other Assets 24.642 32.635 36.551 40.937 45.849 51.351 TOTAL ASSETS 268.843 318.993 355.022 395.374 440.568 491.186 LIABILITIES Accounts Payable 36.951 39.162 43.861 49.124 55.019 61.622 Accrued Expenses 31.206 32.635 36.551 40.937 45.849 51.35 Other Current Liabilities 3.663 3.663 3.663 3.663 3.663 3.663 Total Current Liabilities 71.820 75.459 84.075 93.724 104.532 116.636 Long Term Debt 157.720 186.363 188.010 188.414 187.327 184.462 Accrued Wages 21.418 19.581 21.930 24.562 27.510 30.811 Total Liabilities 250.958 281.403 294.015 306.701 319.368 331.908 EQUITY Common Stock 1.702 1.702 1.702 1.702 1.702 1.702 Capital Surplus 55.513 55.513 55.513 55.513 55.513 55.513 Retained Earnings 118.729 138.434 161.851 189.517 222.044 260.122 Less: Treasury Stock 158.059 158.059 158.059 158.059 158.059 158.059 Total Equity 17.885 37.590 61.007 88.673 121.200 159.278 TOTAL LIABILITIES & EQUITY 268.843 318.993 355.022 395.374 440.568 491.186