ABC, Inc.s sales are expected to increase by 15%. Their finance manager has been given the task of calculating the additional funds needed to sustain this growth.

ABC, Inc. Balance Sheet ($ Millions)

Cash and Securities 45

Accounts Receivable 305

Inventories 360

Total Current Assets 710

Net Fixed Assets 500

Total Assets 1210

Accounts Payable 50

Notes Payable 80

Accruals 50

Total current liabilities 180

Long Term debt 500

Total Liabilities 680

Common Stock 350

Retained Earnings 180

Total Common Equity 530

Total Liab. & Equity 1210

ABC, Inc. Income Statement ($ Millions)

Sales 2500

Total Operating Costs 2300

EBIT 200

Interest 110

EBT 90

Taxes (40%) 36

Net Income 54

Dividends 24

1. Using the information from the balance sheet and the income statement, calculate the AFN for ABC to be able to sustain the expected 15% sales growth.

2. What is the self-supporting growth rate that ABC Inc. is able to sustain without acquiring any external capital?

3. What is the dollar value of the additional sales the firm is able to sustain without acquiring any external capital?