Assume a constant profit margin and dividend payout ratio. Also, assume that this firm's assets and liabilities all vary proportionately with sales. If sales are projected to increase by 10 percent, what is the external financing needed for the following year? Hint: In order to determine this amount, you must first construct a forecasted income statement. What if sales are expected to increase by 20%?

Assume a constant profit margin and dividend payout ratio. Also, assume that this firm's assets and liabilities all vary proportionately with sales. If sales are projected to increase by 10 percent, what is the external financing needed for the following year? Hint: In order to determine this amount, you must first construct a forecasted income statement. What if sales are expected to increase by 20%? Sales Cost of goods sold Depreciation EBIT Interest EBT Tax Net Income (EAT) Dividends Income Statement 2015 17300 10600 3280 3450 680 2770 940 1830 450 Balance Sheet Assets Current Assets Cash and securities Accounts receivable Inventories Total current assets Net fixed assets Total assets 350 940 2360 3650 10850 14500 Liabilities and owners' equity Current liabilities Bank loan Accounts payable 0 1920 Total current liabilities 1920 Long-term debt 3500 Common stock Retained earnings 7500 1580 Total liabilities and owners' equity 14500