Following are the information given for Cafes Richard Bangladesh

Cafs Richard Bangladesh

2020 Income Statement

Net sales Tk. 5,680,000

Cost of goods sold (4,060,000)

Depreciation (420,000)

Earnings before interest and taxes 1,200,000

Less: Interest paid (30,000)

Taxable Income 1,170,000

Less: Taxes (410,000)

Net income Tk. 760,000

Dividends 500,000

Cafs Richard Bangladesh

Comparative Balance Sheets

2019 20202019 2020

Cash70,000180,000Accounts pay.1,350,0001,170,000

Accounts rec.980,000 840,00Long-term debt 720,000 500,000

Inventory1,560,0001,990,000Common stock 3,200,000 3,500,000

Total Current

Assets 2,610,0003,010,00Retained earnings 940,000 1,200,000

Net fixed assets 3,600,0003,360,000

Total assets6,210,000 6,370,000Total liabilities & equity6,210,000 6,370,000

Required :

a) What is the Internal Growth rate for Gloria Jeans BD? What is the sustainable growth rate for Gloria Jeans BD?

b) If sales grow at SGR, how much External Financing will be needed for the year 2021 using Percentage of sales approach, assuming that the firm is operating at full capacity? c) Interest expense and tax rate will not change. Calculate the tax rate (hint: tax rate = tax/taxable income). Please create pro forma statements as well.

d) What's the impact in the new Debt to equity ratio, if any?