C 3 Common stock price 4 Earnings per share 2021 5 Dividends per share 2021 6 7 Growth rate of sales 8 Common stock outstanding 2021 9 Operating costs/sales ratio2021 10 Total liabilities-to-assets ratio2021 11 Proportion of short-term interest-bearing debt2021 12 Tax rate 13 Before-tax cost of debt 14 $49.00 $2.10 $1.26 12% 100,000 89.5% 30% 40% 25% 12.50% 15 a. Constructing the forecasted financial statements (Parts II., III., and IV.) 16 17 Part II. Income Statements 18 Sales 19 Operating costs including depreciation 20 Earnings before interest and taxes (EBIT) 21 Interest 22 Earnings before taxes (EBT) 23 Taxes 24 Net income (NI) 25 Dividends 26 Addition to retained earnings 27 28 Part III. Balance Sheets 29 Assets 30 Cash 31 32 Receivables Inventories 33 Total current assets 34 Fixed assets 35 Total assets 36 Liabilities and Equity 37 Accounts payable 38 Accrued liabilities 39 Notes payable 40 Total current liabilities 41 Long-term debt 42 Total liabilities 43 Common stock 44 Retained earnings 45 Total common equity 46 Total liabilities and equity 47 48 Part V. Notes on Calculations 49 Total liabilities 50 Less: Payables and accruals 51 Interest-bearing debt 52 Allocated to notes payable 53 Allocated to long-term bonds 54 Interest expense 55 Target equity-to-assets ratio 56 Required total equity 2021 $4,200,000.00 2022 Formulas $4,704,000.00 =B18*(1+B7) 3,897,120.00 4,210,080.00 =C18*B9 $302,880.00 22,880.00 $280,000.00 70,000.00 $210,000.00 $493,920.00 =C18-C19 #N/A #N/A #N/A #N/A #N/A #N/A 2021 $210,000.00 420,000.00 840,000.00 $1,470,000.00 1,680,000.00 $3,150,000.00 2022 $235,200.00 B30*(1+B7) #N/A #N/A #N/A #N/A #N/A $420,000.00 210,000.00 $470,400.00 =B37*(1+B7) #N/A 61,000.00 #N/A $691,000.00 #N/A 115,000.00 #N/A $806,000.00 #N/A 2,100,000.00 #N/A 244,000.00 #N/A $2,344,000.00 #N/A $3,150,000.00 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 57 Retained earnings #N/A 58 Required common stock #N/A 59 60 b. Calculating the growth rate in sales at which the additional financing requirements will be exactly zero 61 Profit margin 5.00% 62 Dividend payout ratio 60% Formulas 63 Addition to retained earnings 2021 64 Growth rate in sales #N/A #N/A