Cholesterol Dairy Products has plants in five provinces and operates a very large home delivery service. 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 $4 Accounts payable $5 Accounts receivable 9 Accrued wages 3 Inventory 30 Accrued taxes 2 Current assets $43 Current liabilities $10 Capital assets 43 Long-term debt 10 Common stock 15 Retained earnings 51 Total assets $86 Total liabilities and shareholder's equity $86

The firm has an aftertax profit margin of 4 percent and a dividend payout ratio of 20 percent.

a. If sales grow by 15 percent next year, determine how many dollars of new funds are needed to finance the expansion. (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. (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 3 decimal places.)

Balance Sheet ($ millions) Assets Liabilities and Shareholders' Equity Current assets Current liabilities

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(Click to select) Current assets $ Current liabilities $

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(Click to select) (Click to select) $ (Click to select) Total assets $ Total liabilities and shareholders' equity

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c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.)

Year 1 Year 2 Current ratio X X Total debt / assets % %