(Discretionary financing needs) In the spring of 2013 the Caswell Publishing Company established a custom publishing business for its business clients. These clients consisted principally of small to medium size companies in Round Rock, Texas. However, the company's plans were disrupted when they landed a large printing contract from Dell Computers Corp. that they expected would run for several years. Specifically the new contract would increase firm revenues by 100 percent. Consequently, Caswell's management knew they would need to make some significant changes in firm capacity and quickly. The following balance sheet for 2013 and pro forma balance sheet for 2014 relfect the firms estimates of the financial impact of the 100 percent revenue growth

A.) How much new discretionary financing will Caswell require based on the attached estimates?

B.) Given the nature of the new contract and the specific needs for financing that the firm expects, what recommendations might you offer to the firms CFO as to specific sources of financing the firm should seek to fulfill DFN? (Select all the choices that may apply)

A.) Common Stock

B.) Retained Earnings

C.) Notes payable

D.)Long term Debt

E.) Sale of fixed assets

Caswell Publishing Co. Balance Sheet for 2010 Current assets Net fixed assets Total Accounts payable Accrued expenses Notes payable Current liabilities Long-term debt Total liabilities Common stock (par) Paid-in-capital Retained earnings Common equity Total 11,930,000 17,990,000 29,920,000 1,930,000 1,960,000 1,510,000 5,400,000 6,470,000 11,870,000 940,000 2,030,000 15,080,000 18,050,000 29,920,000 Caswell Publishing Co. Pro Forma Balance Sheet for 2011 Current assets Net fixed assets Total Accounts payable Accrued expenses Notes payable Current liabilities Long-term debt Total liabilities Common stock (par) Paid-in-capital Retained earnings Common equity Projected sources of financing Discretionary financing needs Total financing needs=Total assets 100% 23,860,000 35,980,000 59,840,000 3,860,000 3,920,000 1,510,000 9,290,000 6,470,000 15,760,000 940,000 2,030,000 15,080,000 18,050,000 33,810,000 Caswell Publishing Co. Balance Sheet for 2013 Current assets Net fixed assets Total Accounts payable Accrued expenses Notes payable Current liabilities Long-term debt Total liabilities Common stock (par) Paid-in-capital Retained earnings Common equity Total 11,930,000 17,990,000 29,920,000 1,930,000 1,960,000 1,510,000 5,400,000 6,470,000 11,870,000 940,000 2,030,000 15,080,000 18,050,000 29,920,000 Caswell Publishing Co. Pro Forma Balance Sheet for 2014 Current assets Net fixed assets Total Accounts payable Accrued expenses Notes payable Current liabilities Long-term debt Total liabilities Common stock (par) Paid-in-capital Retained earnings Common equity Projected sources of financing Discretionary financing needs Total financing needs=Total assets 100% 23,860,000 35,980,000 59,840,000 3,860,000 3,920,000 1,510,000 9,290,000 6,470,000 15,760,000 940,000 2,030,000 15,080,000 18,050,000 33,810,000 Caswell Publishing Co. Caswell Publishing Co. Balance Sheet for 2010 Pro Forma Balance Sheet for 2011 Current assets 11,930,000 Current assets Net fixed assets 17,990,000 Net fixed assets Total 29,920,000 Total Accounts payable 1,930,000 Accounts payable Accrued expenses 1,960,000 Accrued expenses Notes payable 1,510,000 Notes payable Current liabilities 5,400,000 Current liabilities Long-term debt 6,470,000 Long-term debt Total liabilities Common stock (par) Paid-in-capital 11,870,000 Total liabilities 940,000 Common stock (par) 2,030,000 Paid-in-capital Retained earnings 15,080,000 Retained earnings Common equity 18,050,000 Common equity Total sources of 29,920,000 Projected financing Discretionary financing needs Total financing needs=Total assets 100% 23,860,000 35,980,000 59,840,000 3,860,000 3,920,000 1,510,000 9,290,000 6,470,000 15,760,000 940,000 2,030,000 15,080,000 18,050,000 33,810,000