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	$8	Accounts payable	$6
Accounts receivable	12	Accrued wages	5
Inventory	21	Accrued taxes	4
Current assets	$41	Current liabilities	$15
Capital assets	41	Long-term debt	15
		Common stock	20
		Retained earnings	32
Total assets	$82	Total liabilities and shareholder's equity	$82

The firm has an aftertax profit margin of 3 percent and a dividend payout ratio of 20 percent.

a. If sales grow by 10 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
(Click to select) Accounts receivable Prepaid expenses Cash Capital Asset Inventory	$	(Click to select) Common stock Accrued taxes Retained earnings Accrued wages Accounts payable	$
(Click to select) Prepaid expenses Cash Accounts receivable Inventory Capital Asset		(Click to select) Accrued wages Retained earnings Accounts payable Common stock Long-term debt
(Click to select) Cash Gross plant Prepaid expenses Accounts receivable Inventory		(Click to select) Accrued taxes Retained earnings Accounts payable Common stock Long-term debt
Current assets	$	Current liabilities	$
(Click to select) Accrued wages Cash Capital Assets Accounts Receivable Inventory		(Click to select) Long-term debt Accrued wages Accounts payable Accrued taxes
		(Click to select) Common stock Accrued wages Accounts payable Accrued taxes	$
		(Click to select) Retained earnings Accrued wages Accounts payable Accrued taxes
Total assets	$	Total liabilities and shareholders' equity	$

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	%	%