Carter Paint Company has plants in four provinces. Sales last year were $$100$ million, and the balance sheet at year$-$end is similar in percent of sales to that of previous years $($and this will continue in the future$).$ All assets and current liabilities will vary directly with sales. Assume the firm is already using capital assets at full capacity.

Balance Sheet

$($in $ millions$)$

Assets Liabilities and Shareholders' Equity

Cash $$8$ Accounts payable $$9$

Accounts receivable $13$ Accrued wages $7$

Inventory $16$ Accrued taxes $5$

Current assets $37$ Current liabilities $21$

Capital assets $37$ Long$-$term debt $15$

Common stock $20$

Retained earnings $18$

Total assets $$74$ Total liabilities and shareholders' equity $$74$

The firm has an aftertax profit margin of $5$ percent and a dividend payout ratio of $20$ percent.

a$.$ If sales grow by $20$ percent next year, determine how many dollars of new funds are needed to finance the expansion. $($Do not round intermediate calculations. Enter the answer in millions. Round the final answer to $3$ decimal places.$)$

The firm needs $

million in external funds.

b$.$ Prepare a pro forma balance sheet with any financing adjustment made to long$-$term debt. $($Do not round intermediate calculations. Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Enter the answers in millions. Round the final answers to $2$ decimal places.$)$

Balance Sheet

$($$ millions$)$

Assets Liabilities and Shareholders' Equity

Cash

$

Accounts payable

$

Accounts receivable

Accrued wages

Inventory

Accrued taxes

Current assets $

Current liabilities $

Capital Assets

Long$-$term debt

Common stock

$

Retained earnings

Total assets $

Total liabilities and shareholders' equity

$

c$.$ Calculate the current ratio and total debt to assets ratio for each year. $($Do not round intermediate calculations. Round the final answers to $1$ decimal places.$)$

Year $1$ Year $2$

Current ratio

X

X

Total debt $/$ assets

$\%$

$\%$Carter Paint Company has plants in four provinces. Sales last year were $$100$ million, and the balance sheet at year$-$end is similar in

percent of sales to that of previous years $($and this will continue in the future$).$ All assets and current llabilitles will vary directly with

sales. Assume the firm Is already using caplal assets at full capacity.

The firm has an aftertax profit margin of $5$ percent and a dividend payout ratio of $20$ percent.

a$.$ If sales grow by $20$ percent next year, determine how many dollars of new funds are needed to finance the expansion. $($Do not

round Intermedlate calculations. Enter the answer In milllons. Round the final answer to $3$ decimal places.$)$

The firm needs $$,$ million in external funds.

b$.$ Prepare a pro forma balance sheet with any financing adjustment made to long$-$term debt. $($Do not round Intermeclate

calculatlons. Input all answers as positlve values. Be sure to llst the assets and llabillties In order of thelr llquidity. Enter the

answers In millions. Round the final answers to $2$ decimal places.$)$

c$.$ Calculate the current ratio and total debt to assets ratio for each year. $($Do not round Intermedlate calculatlons. Round the final

answers to $1$ decimal places.$)$