1. Lucas Industries has provided you with the following projections. Create pro forma income statements and balance sheets for each of the next five years (2019-2023). Be sure to identify the external financing required for each year.

2. 	2019	2020	2021	2022	2023
   Sales growth rate (%)	7	7	6	6	5
   Gross margin (%)	30	30	29	29	29
   Increase in SG&A (%)	7	7	6	6	5
   Increase in Dep. Expense ($)*	5	5.5	6.5	7.5	7.5
   Cap. Exp. ($) *	50	55	65	75	75
   Inventory Turns	7.5	7.7	7.9	8.2	8.2
   DSO	22	22	21	21	20
   DPO	16	16	18	18	18
   Other cur. assets (% to sales)	0.6	0.6	0.6	0.6	0.6
   Accruals (% of sales)	2.5	2.5	3	3	3
   Cash (% of sales)	3	3	2	2	2
   Dividends (% of net income)	10	10	10	15	15

   *Values are in millions.

   Note: The existing long-term loan will continue to be paid down by $20 million each year. Notes payable will remain constant over the forecast period. Interest of 10 percent will be paid on the ending balance of the loans for the previous year (i.e., 2019 interest expense will be based on ending 2018 debt outstanding).

3. Suppose Lucas Industries has approached your bank about a loan, and has provided the pro forma analysis based on the assumptions above. Create a table that compares each of the forecast assumptions to the firms historical performance. Are the projections Lucas has provided reasonable? Why or why not? How would this assessment affect your loan decision?

4. You will need to upload your completed assignment. The DuPont analysis calculations, the pro formas, and the table for question 3 may be completed in Excel. Your written responses should not exceed two pages. Please use 12-point text, double-spacing and 1-inch margins.