Metallic Industries, Inc. Metallic Industries, Inc. Income Statement, Year Ended December 31, 2020 Balance Sheet as of December 31, 2020 Sales Revenue $30,000,000 Assets Liabilities & Stockholders' Equity Cost of Goods Sold 21,000,000 Current Assets Current Liabilities Gross Profit 9,000,000 Cash $1,000,000 Accounts Payable $8,000,000 Operating Expenses: Marketable Securities 3,000,000 Notes Payable 8,000,000 Selling Expense $3,000,000 Accounts Receivable 12,000,000 Accruals 500,000 General & Administrative Expenses 1,800,000 Inventories 7,500,000 Total Current Liabilities $16,500,000 Lease Expense 200,000 Total Current Assets $23,500,000 Long-Term Debt $20,000,000 Depreciation Expense 1,000,000 Stockholders' Equity: Total Operating Expense 6,000,000 Net Fixed Assets $26,500,000 Preferred Stock $- Operating Profit $3,000,000 Common Stock & Paid-In Surplus 11,500,000 Interest Expense 1,000,000 Retained Earnings 2,000,000 Net Profit before Taxes $2,000,000 Total Stockholders' Equity $13,500,000 Taxes (40%) 800,000 Net Profit after Taxes $1,200,000 Total Assets $50,000,000 Total Liabilities & Equity $50,000,000 Additional Information: Metallic pays 2.10% on its short-term debt and 4.16% on its long-term debt. These rates are expected to hold for the near future. Question 1 The company needs to plan for a 10% growth in sales for the year 2021. Estimate external financing needed (EFN) for the projected sales growth in 2021, using the percentage of sales method. Assume all operating expenses will rise at the same rate as sales (including lease expense). Make sure to set up the "assumptions box", followed by the projected 2021 income statement & December 31, 2021 balance sheet. Metallic has a stable dividend payout ratio of 50%. Then, use the spreadsheet feature of automated iterations to solve for EFN. Assume that the firm is at full capacity sales, and that capital is not lumpy. All categories of current assets (including marketable securities) are expected to grow at the same rate as sales. Question 2 Consider Accounts Payable & Accruals to be spontaneous liabilities. Estimate EFN under the same assumptions as above, but this time use the "direct method". Half of any new financing will be raised through short-term debt, and half through long-term debt. No principal pay-down is expected in the coming year. Question 3 Adjust your EFN estimate for Question 2 assuming that Metallic is operating at 95% capacity as of 2020 end.