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	$9
Accounts receivable	10	Accrued wages	8
Inventory	22	Accrued taxes	7
Current assets	$36	Current liabilities	$24
Capital assets	36	Long-term debt	10
		Common stock	15
		Retained earnings	23
Total assets	$72	Total liabilities and shareholder's equity	$72

The firm has an aftertax profit margin of 4 percent and a dividend payout ratio of 35 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) Capital Asset Inventory Prepaid expenses Accounts receivable Cash	$	(Click to select) Accrued taxes Common stock Accrued wages Accounts payable Retained earnings	$
(Click to select) Accounts receivable Cash Capital Asset Prepaid expenses Inventory		(Click to select) Accrued wages Retained earnings Accounts payable Common stock Long-term debt
(Click to select) Prepaid expenses Accounts receivable Gross plant Inventory Cash		(Click to select) Accrued taxes Retained earnings Accounts payable Common stock Long-term debt
Current assets	$	Current liabilities	$
(Click to select) Inventory Accrued wages Accounts Receivable Capital Assets Cash		(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	%	%