5) Another firm recently completed its fiscal year. The financial statements for last year follow: BALANCE SHEET Current Assets $ Net Fixed Assets $ 1,250,000 4,200,000 Current Liabilities $ 750,000 Long Term Debt $ 2,500,000 Net Worth $ 2,200,000 $ 5,450,000 Total Assets $ 5,450,000 INCOME STATEMENT Net Sales $ 6,875,000 Expenses $ (5,843,750) Net Profit $ 1,031,250 Dividends $ 515,625 The firm is modeling the upcoming year to plan for needed external financing (NEF). The analyst makes the following assumptions: The sales division estimates a 15% increase in sales. The firm is operating at capacity, so fixed assets will remain proportional to sales. Forecast the amount of external funding needed in the upcoming year: NEF= Total Assets/Sales Change in Sales Current Liabilities / Sales Change in Sales Sales Net Profit Margin [1 - (Dividends/Net Profit)] How might the firm reduce its reliance on borrowed funds? 5) Another firm recently completed its fiscal year. The financial statements for last year follow: BALANCE SHEET Current Assets $ Net Fixed Assets $ 1,250,000 4,200,000 Current Liabilities $ 750,000 Long Term Debt $ 2,500,000 Net Worth $ 2,200,000 $ 5,450,000 Total Assets $ 5,450,000 INCOME STATEMENT Net Sales $ 6,875,000 Expenses $ (5,843,750) Net Profit $ 1,031,250 Dividends $ 515,625 The firm is modeling the upcoming year to plan for needed external financing (NEF). The analyst makes the following assumptions: The sales division estimates a 15% increase in sales. The firm is operating at capacity, so fixed assets will remain proportional to sales. Forecast the amount of external funding needed in the upcoming year: NEF= Total Assets/Sales Change in Sales Current Liabilities / Sales Change in Sales Sales Net Profit Margin [1 - (Dividends/Net Profit)] How might the firm reduce its reliance on borrowed funds