$,$ Healthy Grains Inc., was established in $2008$ and reached sales of over $$4$ million by $2015.$ by ear for too long.$$ Geoff immediately called their treasurer, Matt Evans. $$Matt$,$ I need to know how much additional funding we are going to need for the next year,$$ said Geoff. $$The growth rate of revenues should be be$-$tween $25\%$ and $40\%.$ I would really appreciate if you can have the forecast on my desk by early next week.$$ Matt knew that his fishing plans for the weekend had better be put aside$$it was going to be a long and busy weekend for him. He immediately asked the accounting department to give him the last three years$$ financial statements $($see Tables $1$ and $2)$ and got right to work.

Income Statement

For the Year Ended Dec. $31$st $2015$

$201520142013$

Sales $4,700,0003,760,0003,000,000$

Cost of Goods Sold $3,877,5003,045,6002,400,000$

Gross Profit $822,500714,400600,000$

Selling and G&A Expenses $275,000250,000215,000$

Fixed Expenses $90,00090,00090,000$

Depreciation Expenses $25,00025,00025,000$

Earnings Before Interest and Taxes $($EBIT$)432,500349,400270,000$

Interest Expense $66,00066,00066,000$

Earning before Taxes $($EBT$)366,500283,400204,000$

Taxes $40\%146,600113,36081,600$

Net Income $219,900170,040122,400$

Retained Earnings

Questions: Calculate revenue in table $1$

$1.$ This is the first time Matt and Geoff will be conducting a fi$-$nancial forecast for Healthy Grains Inc. How do you think they should proceed? Which approaches or models can they use? What are the assumptions necessary for utilizing each model? $2.$ If Healthy Grains Inc. is operating its fixed assets at full ca$-$pacity, what growth rate can it support without the need for any additional external financing? $3.$ Healthy Grains Inc. has a flexible credit line with the Uptown Bank. If Geoff decides to keep the debt$-$equity ratio constant, up to what rate of growth in revenue can the firm support? What assumptions are necessary when calculating this rate of growth? Are these assumptions realistic in the case of Healthy Grains Inc.? Explain. $4.$ Initially, Matt assumes that the firm is operating at full ca$-$pacity. How much additional financing will it need to support revenue growth rates ranging from $25\%$ to $40\%$ per year? $5.$ After conducting an interview with the production manager, Matt realizes that Healthy Grains Inc. is operating its plant at $90\%$ capacity. How much additional financing will it need to support growth rates ranging from $25\%$ to $40\%?6.$ What actions can Geoff take in order to alleviate some of the need for external financing? Analyze the feasibility and impli$-$cations of each suggested action. $7.$ How critical is the financial condition of Healthy Grains Inc.? Is Dawn justified in being concerned about the need for finan$-$cial planning? Explain why. $8.$ Given that Geoff prefers not to deviate from the firm$$s $2015$ debt$-$equity ratio, what will the firm$$s pro$-$forma income state$-$ment and balance sheet look like under the scenario of $40\%$ growth in revenue for $2016($ignoring feedback effects$)?$