Calculate the sustainable growth rate for East Coast Yachts. Calculate external funds needed (EFN) and prepare pro forma income statements and balance sheets assuming growth at precisely this rate. Recalculate the ratios in the previous question. What do you observe?

EAST COAST YACHTS 2020 Income Statement
Sales	$550,424,000
Cost of goods sold	397,185,000
Selling, general, and administrative	65,778,000
Depreciation	17,963,000
EBIT	$69,498,000
Interest expense	9,900,000
EBT	$59,598,000
Taxes (25%)	14,899,500
Net income	$ 44,698,500
Dividends	$19,374,500
Retained earnings	25,324,000

EAST COAST YACHTS 2020 Balance Sheet
Current assets		Current liabilities
Cash and equivalents	$10,107,000	Accounts payable	$40,161,400
Accounts receivable	16,813,300	Accrued expenses	5,723,700
Inventory	18,135,700	Total current liabilities	$45,855,100
Other	1,054,900
Total current assets	$46,110,900
Fixed assets		Long-term debt	$152,374,000
Property, plant, and equipment	$412,032,000	Total long-term liabilities	$152,374,000
Less accumulated depreciation	(102,452,000)
Net property, plant, and equipment	$309,580,000
Intangible assets and others	6,772,000	Stockholders equity
Total fixed assets	$316,352,000	Preferred stock	$ 1,773,000
		Common stock	31,802,000
		Capital surplus	27,348,000
		Accumulated retained earnings	146,052,800
		Less treasury stock	(42,772,000)
		Total equity	$164,203,800
Total assets	$362,462,900	Total liabilities and shareholders equity	$362,462,900

YACHT INDUSTRY RATIOS
	Lower Quartile	Median	Upper Quartile
Current ratio	.86	1.51	1.97
Quick ratio	.43	.75	1.01
Total asset turnover	1.10	1.27	1.46
Inventory turnover	12.18	14.38	16.43
Receivables turnover	10.25	17.65	22.43
Debt ratio	.32	.56	.61
Debt-equity ratio	.83	1.13	1.44
Equity multiplier	1.83	2.13	2.44
Interest coverage	5.72	8.21	10.83
Profit margin	5.02%	7.48%	9.05%
Return on assets	7.05%	10.67%	14.16%
Return on equity	14.06%	19.32%	26.41%