Gainesville Surgicenter Inc. is a large, ambulatory surgery owned by a group practice of surgeons in Gainesville, FL. The 2014 financial statements for the firm ar shown below: Balance Sheet as of December 31, 2014 (Thousands of dollars)
Cash		$1,800		Accounts payable		$7,200
Receivables		$10,800		Notes payable		$3,472
Inventories		$12,600		Accruals		$2,520
Total current assets		$25,200		Total current liabilities		$13,192
Net fixed assets		$21,600		Mortgage bonds		$5,000
				Common stock		$2,000
				Retained earnings		$26,608
Total assets		$46,800		Total liabilities & equity		$46,800
Income Statement for 2014 (Thousands of dollars)
Revenues			$36,000
Operating costs			$30,783
Earnings before interest and taxes			$5,217
Interest			$1,017
Earnings before taxes			$4,200
Taxes (40%)			$1,680
Net income			$2,520
Dividends (60%)			$1,512
Addition to retained earnings			$1,008
a. Assume that the company was operating at full capacity in 2014 with regard to all items except fixed assets (operating rooms and support space); fixed assets in 2014 were utilized to only 75 percent of capacity. By what percentage could 2015 revenues increase over 2014 revenues without the need for an increase in fixed assets?
b. Now suppose 2015 revenues increase by 25 percent over 2014 revenues. Use the constant growth method to develop a pro forma balance sheet and income statement as in Exhibit 14.4. Assume that Gainesville cannot sell any fixed assets and that Gainesville cannot sell any fixed assets and that any financing required is borrowed as notes payable at an interest rate of 12 percent.