Consider the 2015 Income Statement and Balance Sheet information for East Coast Yachts.

1a. Calculate the sustainable growth rate of East Coast Yachts.

1b. Calculate the External Financing Needed (EFN) and prepare the Pro Forma Income

Statement and Balance Sheet assuming sales grow at the sustainable growth rate

.

East Coast Yachts Income Statement (2015) EAST COAST YACHTS 2015 Income Statement Sales Cost of goods sold Other expenses Depreciation Earnings before interest and taxes (EBIT) Interest Taxable income Taxes (40%) Net income $210,900,000 148,600,000 25,192,000 6,879,000 $ 30,229,000 3.791,000 $ 26,438,000 10,575,200 $ 15,862,800 Dividends Add to RE $ 4,759,301 $11,103,499 East Coast Yachts Balance Sheet (2015) EAST COAST YACHTS Balance Sheet as of December 31, 2015 Assets Liabilities & Equity Current assets Current liabilities Cash $ 3,285,600 Accounts payable $ 6,977,700 Accounts receivable 5,910,800 Notes payable 14,342,600 Inventory 6,627,300 Total $ 21,320,300 Total $15,823,700 Fixed assets Long-term debt $ 36,400,000 Net plant and equipment $101,481,200 Shareholders' equity Common stock $ 5,580,000 Retained earnings 54,004,600 Total equity $ 59,584,600 Total assets $117,304,900 Total liabilities and equity $117,304,900