A&B Corporation has prepared the following financial information along with the assumptions detailed below. A&B Corporation Financial Statements ($ millions) Income Statement Balance Sheet 2021 Forecasted 2022 2021 Forecasted 2022 Sales $3,000 Cash $200 $300 COGS 2,250 A/R 700 760 Operating expense 240 Inventory 1.200 1,117 EBIT 510 Total current assets 2,100 2,177 Interest expense 70 70 Net PP&E 1,600 1,840 EBT 440 Total assets 3,700 4,017 EBT 440 Total assets 3,700 4,017 Tax 110 Net income $330 Total debt 1,233 1,233 Shareholders' 2,467 equity ?? Total liabilities & $3,700 equity ?? External Funding Required ?? Assumptions Sales growth rate 12.0% COGS/sales 75.0% Rotention ratio 550/ DER Assumptions Sales growth rate 12.0% COGS/sales 75.0% Retention ratio 55.0% Operating Expense/Sales 8.0% Tax Rate 25.0% Required: a. Assume total debt remains at 1,233, and thus the interest expense is unchanged for 2022. Create a pro forma income statement for 2022, and forecast the external funding required. (6 marks) b. Rather than seek external financing, the company decides to make operational changes. The company wishes to keep accounts receivable at the 2021 level, with the remainder of external financing required coming from a reduction in the level of inventory. Calculate the changes in the company's collection period and inventory turnover required to achieve this result. (3 marks) C. Instead of operational changes, assume the company wishes to maintain the same debt/equity ratio. Forecast the new external funding required. (2 marks)