(Financial forecasting--discretionary Mancing noods) The most recent balance sheet for the Armadillo Dog Biscur Co Inc. is shown in the following table The company is about to embark on an advertising campaign, which is expected to use sales from the current level of $6 million to $8 milion by the end of next year. The firm is currently operating at full capacity and will have to increase its investment in both current and fixed assets to support the projected level of new sales. In fact, the firm estimates that both categories of assets will rise in direct proportion to the projected increase in sales The im's net profits were 5 percent of the current year's sales but are expected to se to 6 percent of next year's sales. To help support its anticipated growth in asset needs next year, the firm has suspended plans to pay cash dividends to its stockholders. In past years, a $1.50-per-share dividend has been paid annually. Armadillo's accounts payable and accrued expenses are expected to vary directly with sales. In addition, notes payable will be used to supply the funds needed to finance next year's operations that are not forthcoming from other sources Fill in the table and project the firm's needs for discretionary financing. Use notes payablo as the balancing entry for ture discretionary financing needs b. Compare Armadillo's current ratio (current assets current liabilities) and debt ratio (total liabilities total assets) before the growth in sales and after. What was the effect of the expanded sales on these two dimensions of Armadilo's financial condition? c. What difference, if any, would have resulted i Ammadilo's sales had risen to $7 million in 1 year and 58 million only after 2 years? Discum only, no calculations are required a. Fun in the ancing needs. (Round to one decimal phoon) Armadillo D Data table Current Net fixed Total Accounts pay Accrued exp Noles payable Current liabil Long-term od Common to Retained Common og Total Click on the following contin order to copy its contents into a spreadsheet) Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL PERCENT OF SALES PROJECTED LEVEL Current ass $2.0 Nel fixed assets 3.0 Total $5.0 Accounts payable $0.5 Accrued expense 0.5 Noles payable 0 Current liabilities $1.0 Long-term debt $20 Common stock 0.5 Retained earnings 1.5 Common equity $20 Total $50 (Round to on Armadillo D Current asse Financial forcestino dienominar financina naadi Tha most mount balance sheet ne the Armadillo Don Plant On Inn is shown in the following thin the common is about to amharike a. Fill in the table and project the firm's needs for discretionary financing Use notes payable as the balancing entry for future discretionary financing needs (Round to one decimal place) Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL PERCENT OF SALES PROJECTED LEVEL Current assets $20 Net fixed assets 3.0 Total $5.0 Accounts payable $0.5 Accrued expense 05 Notes payable 0 Current liabilities $1.0 Long-term debt Common stock 0.5 Retained earnings 1.5 Common equity $20 Total $50 $20 ololo PERCENT OF SALES 33.3% PROJECTED LEVEL $2.7 D (Round to one decimal place) Armadillo Dog Biscuit Co. Inc. (s Millions) PRESENT LEVEL Current assets $20 Net fixed assets 3.0 Total $5.0 Accounts payable $0.5 Accrued expense 0.5 Notes payable 0 Current liabilities 51.0 Long-term debt $2.0 Common stock 0.5 Retained oamings 1.5 Common equity $2.0 Total $5.0 $27 Inanamcntio inary financial The most recent he shant for the Armenian Cine shown in the within the woman is about in amhark Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL PERCENT OF SALES PROJECTED LEVEL Current assets $2.0 333% Net fixed assets 3.0 50.0% 40 Total $50 Accounts payable $0.5 Accrued expense 0.5 Notes payable 0 Current abilities 51.0 Long-term debt $20 Common stock 0.5 Retained caminos 1.5 Common equity $20 Total 55.0 $20 PERCENT OF SALES 33 3% 50.0% PROJECTED LEVEL $27 4.0 $8.7 (Round to one decimal place) Armadillo Dog Biscuit Co. Inc. (8 Milliona) PRESENT LEVEL Current asset Net foed assets 3,0 Total $5.0 Accounts payable $0 5 Accrund expense 0.5 Notes payable 0 Current liabilities $1.0 Long-term debt $2.0 Common stock 0.5 Retained earnings 15 Common equity $2.0 Total 55.0 lolo (Round to one decimal place.) Finannel fomentin Warnww finansnett The most at han sheet foetha Armadillo Don Rint On Inc. is shown in the following thi Tha mnany is about to embar Armadillo Dog Biscuit Co. Inc. ($ Millions) PRESENT LEVEL PERCENT OF SALES PROJECTED LEVEL Current asset $20 33.3% 527 Nel fixed as 30 50.0 40 Total $5.0 $6.7 Accounts payable $0.5 8.3% $0.7 Accrued expense 0.5 Noles payable 0 Current labited $1.0 Long-term debut $20 Common stock 0.5 Retained earnings 15 Common culty $2.0 Tot $50 (Round to one decimalplan) ent PERCENT OF SALES 33.3% 50.0% PROJECTED LEVEL $2. 4.0 $6.7 $0.7 0.7 8.3% 8.3% 0 Armadillo Dog Biscuit Co, Inc. (5 Millions) PRESENT LEVEL Current assets $20 Not fixed assets 30 Total $5.0 Accounts payable $0.5 Accrued expense 0.5 Notes payable 0 Current abilities $10 Long-term debe $20 Como sock 05 Retained earning 1.5 Common equity 52.0 $50 el halo Round to one decimal place) Ironomie w now. The most recent that the Amadini Co. Inc. In than in the fire il Thari shut there (Round to one decimal place) PERCENT OF SALES PROJECTED LEVEL 33,3% $27 50.0% 4.0 $6.7 3.3% 8.3% 07 $07 Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL Current asses $2.0 Net fixed assets 3.0 Total $5.0 Accounts payable 505 Accrued expense 0.5 Notes payable 0 Current liabilities $1.0 Long-term det $20 Common stock 05 Retained earnings 15 Common equity 52.0 Total $5.0 $2.0 PERCENT OF SALES 333 50.0 PROJECTED LEVEL 52.7 4.0 $6. in (Round to one decimal place) Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL Current assets 520 Nel fixed 3.0 Total $50 Accounts payati $0.5 Agored experte 0.5 Notes payable 0 Current liabities 31.0 Long-term debe 520 Comenon stock 0.5 Retained eamings 1.5 Common equity $2.0 Total $5.0 8.35 8.3% 507 0. in $2.0 0.5 Financini fromene nomination Financing mandal The most renanthalarantant for the Amadiin Don Rist Cn In de shown in the following them Thacomnare about the (Round to one decimal place.) PERCENT OF SALES 33.3% 50.0% Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL Current assets $2.0 Nel fixed assets 3.0 Total 55.0 Accounts payable $0.5 Accrued expense 0.5 Notes payable D Current abilities $1.0 Long-term debt $2.0 Common stock 0.5 Retained earnings 1.5 Common equity $2.0 Total $50 PROJECTED LEVEL 52.7 4.0 $6.7 $0.7 0.7 8.3% 8.3% $2.0 0.5 2.0 (Round to one decimal place.) PERCENT OF SALES 33.3% 50.0% PROJECTED LEVEL $27 4.0 $6.7 S0.7 0.7 8.3% 8.3% Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL Current assets $20 Net fixed assets 3.0 Total 35.0 Accounts payable $0.5 Accrued expense 0.5 Notes payable 0 Current liabilities $1.0 Long-term debt $2.0 Common stock 0.5 Retained samings 1.5 Comman equity $2.0 Total $5.0 Meses $20 0.5 20 25 Financial fomentindow Morandina model Thement meant halanan shant for the Armadito Do it in a shown in the following them the many in the name (Round to one decimal place) Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL PERCENT OF SALES PROJECTED LEVEL Current assets $2.0 33.3% $2.7 Net fixed assets 3.0 50.0% Total $5.0 Accounts payable $0.5 8.3% Accrued expense 05 8.3% Notes payable 0 Current liabilities $1.0 Long-term debt $20 $2.0 Common stock 0.5 0.5 Retained earings 1.5 20 Common equity $20 2.5 Total $5.0 $6.7 bestela NO PERCENT OF SALES 33.3% 50.0% SU PROJECTED LEVEL $2.7 4.0 $6.7 $0.7 (Round to ono decimal place) Armadillo Dog Biscuit Co. Inc. (5 Millions) PRESENT LEVEL Current assets $20 Net foxed assets 3.0 Total $50 Accounts payable 50.5 Accrued expense 0.5 Notes payable 0 Current liabilities $1.0 Long-term debt $2.0 Common stock 0.5 Retained earnings 15 Common equity $2.0 Total $5.0 8.3% 8.3% 0.7 0.8 $ $20 0.5 20 25 $6.7 ***