Below are Zeta Corporation's 2022 financial statements.Sales for year 2023 are projected to increase by 12 percent. Tax rate will be 25% in year 2023. The company maintains a constant dividend pay-out ratio, and currently operates at full capacity.

Instructions:

1.Calculate internal and sustainable growth rates. Explain what they mean.

2.Using the percentage of sales approach, prepare proforma financial statements - income statement and balance sheet - for year 2023.

3.Calculate the amount of external financing needed in 2023. What financing options are available for the company?

4.Assuming that the company operated at 85% capacity in 2022, re-calculate the amount of external financing needed in 2023.

5.Discuss the role of financial planning.

Income Statement	2022
Sales	40 350 760
Cost of goods sold	30 100 376
Operating expenses	5 116 706
Depreciation	1 808 322
Operating income	3 325 355
Interest	631 953
Taxable income	2 693 402
Taxes	673 351
Net income	2 020 051
Dividends	614 437
Addition to retained earnings	1 405 614

Balance Sheet 2022
Assets		Liabilities and Equity
Current assets			Current liabilities
Cash	457 527		Accounts payable	931 117
Accounts receivable	734 792		Notes payable	2 126 173
Inventory	1 076 495		Total CL	3 057 291
Total CA	2 268 814
			Long-term debt	5 490 716
Fixed assets
Net PP&E	17 763 725		Shareholder equity
			Common stock	400 909
			Retained earnings	11 083 623
			Total equity	11 484 533
Total Assets	20 032 539		Total L&E	20 032 539