Kraft Heinz had the following condensed balance at the end of last year (in millions of dollars):

Cash 13.5 Accounts Payable 5.0

Receivables 26.0 Accrued Liabilities 7.5

Inventories 68.0 Notes Payable 23.0

Total Current 107.5 Total Current 35.5

Net Fixed 15.0 Long Term Bonds 6.0

Total Assets 122.5 Common Stock 15.0

Retained Earnings 66.0

Total Liabilities & Equity 122.5

Sales for last year were $140 million, while net income for the year was $3.5 million. Kraft Heinz paid dividends of $1.4 million to common stockholders. Assume for next year all accounts that change spontaneously change at the same percent as sales. Fixed assets are sufficient to accommodate next years sales. The profit margin and dividend payout ratio remain similar. Remember:

Profit Margin = Net Income / Sales

Dividend Payout Ratio = Dividends / Net Income

a. What are Kraft Heinzs Profit Margin and Dividend Payout ratio?

b. If sales are projected to increase by $70 million next year, what is the projected change in retained earnings for next year?

c. Construct Kraft Heinzs pro forma balance sheet for next year. Any additional funds needed are met as follows: 80% notes payable and 20% by common stock.