4. ZEDO COMPANY - ADDITIONAL FINANCING NEEDED. Assume sales grow 40% in 2021 over 2020; the average collection period increases by 9 days in 2021 compared to 2020 (360 days in the year), inventory turnover based on sales decreases by 1 in 2021 compared to 2020. Zedo pays a constant percentage of Net Income as a dividend, and 2020 net fixed assets are operating at 90% of capacity. INCOME STATEMENT 2020 2021 Net Sales $800 $1120 -910 Cost of Goods Sold - 650 EBIT $150 $210 Interest Expense -15 -15 EBT $135 $195 Taxes 40% -54 -78 Net Income $81 $117 $27 39 Dividends Additions to Retained Earrings BALANCE SHEET - ASSETS 54 78 Cash $50 $50 80 140 Accounts Receivable Inventories 100 165 Total Current Assets $230 $355 Net Fixed Assets 370 333 $600 $688 $60 $60 20 20 20 Total Assets LIABILITIES AND EQUITY Accounts Payable Notes Payable Accruals Total Current Liabilities Long-term Debt Common Stock Retained Earnings Total Liabetes and Equities 20 $100 100 100 100 190 190 210 $600 Estimate the following ratios for ZEDO after the first pass for 2021 assuming any additional financing needed is obtained 25% with notes payable and 75% long- term debt. Assume in 2020, short-term interest rates were 3% points less than long-term rates; i.e. if short-term rates are 6%, then long-term rates are 9%. Assume further that rates are expected to remain at those levels in 2021. Finally, any remaining AFN after 1st pass is included in total debt for ratios. a) Current Ratio Answer b) Times Interest Earned Ratio Answer c) Total Debt Ratio I Answer d) Net Profit Margin Answer e) Total Asset Turnover Answer DISCUSS THE STRENGTHS AND WEAKNESSES YOU SEE WITH ZEDO