Given MicroDrives accounting information in 2012 and 2011, lets assume for 2013 Sales increase by 10% and: Non-Cash Current assets as a percentage of sales remain the same Fixed asset as a percentage of sales remains the same , i.e., Fixed Asset/Sales is the same Operating liabilities as a percentage of sales remains the same Short term investment and interest bearing debt remains the same Operating cost (excluding D&A) as a percentage of sales decreases by 10% (10 percentage pts) D&A as a percentage of preceding years Net P&E remains the same Note payable interest rate is 5%; bond interest rate is 10%; Tax rate is 40% Preferred dividend yield 10% and it is paid out No dividend payment to common shareholders Common stocks and preferred stocks remain the same

I/S

I/S	2011	2012