Hatfield Medical Supplys stock price had been lagging its industry averages, so its board of directors brought in a new CEO, Jaiden Lee. Lee had brought in Ashley Novak, a finance MBA who had been working for a consulting company, to replace the old CFO, and Lee asked Novak to develop the financial planning section of the strategic plan. In her previous job, Novaks primary task had been to help clients develop financial forecasts, and that was one reason Lee hired her.

Novak began by comparing Hatfields financial ratios to the industry averages. If any ratio was substandard, she discussed it with the responsible manager to see what could be done to improve the situation. The following data show Hatfields latest financial statements plus some ratios and other data that Novak plans to use in her analysis.

Balance Sheet	12/31/2019		Income Statement	12/31/2019
Cash	$ 90		Sales	$ 9,000.9
Accounts receivable	$ 1,260		Operating Costs	$ 8,100.9
Inventories	$ 1,440		Depreciation	$ 360.0
Total Current Assets	$ 2,790		EBIT	$ 540.0
Net fixed assets	$ 3,600		Interest	$ 144.0
Total Assets	$ 6,390		Pre-tax earnings	$ 396.0
			Taxes (25%)	$ 99.00
Accounts payable & accruals	$ 1,620		Net Income	$ 297.00
Line of credit	$ -
Total Current Liabilities	$ 1,620		Additional Information
Long-term debt	$ 1,800		Dividends	$ 100
Total Liabilities	$ 3,420		Additions to RE	$ 197
Common stock	$ 2,100		Common shares	50
Retained earnings	$ 870		EPS	$ 5.94
Total common equity	$ 2,970		DPS	$ 2.00
Total Liabilities & Equity	$ 6,390		Ending stock price	$ 40.00
	Hatfield	Industry
(Op. costs)/Sales	90%	88%
Depr./FA	10%	12%
Cash/Sales	1%	1%
Receivables/Sales	14%	11%
Inventories/Sales	16%	15%
Fixed assets/Sales	40%	32%
(Acc. Pay. & accr.)/Sales	18%	12%
Tax rate	25%	25%
Target WACC	10%	11%
Interest rate on debt	8%	7%
Profit margin (M)	3.30%	5.60%
Return on assets (ROA)	4.60%	9.50%
Return on equity (ROE)	10.00%	15.10%
Sales/Assets	1.41	1.69
Asset/Equity	2.15	1.59
Debt/TA	28.20%	16.90%
(Total Liabilities)/(Total Assets)	53.50%	37.30%
Times interest earned	3.80	11.70
P/E ratio	6.70	16.00
OP ratio: NOPAT/Sales	4.50%	6.10%
CR ratio: (Total op. capital)/Sales	53.00%	47.00%
ROIC	8.50%	13.00%

Use the AFN equation to estimate Hatfields required new external capital for 2020 if the sales growth rate is 11.1%. Assume that the firms 2019 ratios will remain the same in 2020.