Please answer all of the questions in a detailed manner. I need to write a 5-7 page paper. Thank you so much FINANCIAL FORECASTING

Sue Wilson, the new financial manager of New World Chemicals (NWC), a California producer of specialized chemicals for use in fruit orchards, must prepare a formal financial forecast for 2019. NWCs 2018 sales were $2 billion, and the marketing department is forecasting a 25% increase for 2019. Wilson thinks the company was operating at full capacity in 2016, but she is not sure. The first step in her forecast was to assume that key ratios would remain unchanged and that it would be business as usual at NWC. The 2018 financial statements, the 2019 initial forecast, and a ratio analysis for 2018 and the 2019 initial forecast are given in Table IC 17.1. Assume that you were recently hired as Wilsons assistant and that your first major task is to help her develop the formal financial forecast. She asks you to begin by answering the following questions.

a. Assume (1) that NWC was operating at full capacity in 2018 with respect to all assets, (2) that all assets must grow at the same rate as sales, (3) that accounts payable and accrued liabilities also will grow at the same rate as sales, and (4) that the 2018 profit margin and dividend payout will be maintained. Under those conditions, what would the AFN equation predict the companys financial requirements to be for the coming year?

b. Consultations with several key managers within NWC, including production, inventory, and receivable managers, have yielded some very useful information. 1. NWCs high DSO is largely due to one significant customer who battled through some hardships the past 2 years but who appears to be financially healthy again and is generating strong cash flow. As a result, NWCs accounts receivable manager expects the firm to lower receivables enough for a calculated DSO of 34 days without adversely affecting sales. 2. NWC was operating slightly below capacity; but its forecasted growth will require a new facility, which is expected to increase NWCs net fixed assets to $700 million. 3. A relatively new inventory management system (installed last year) has taken some time to catch on and to operate efficiently. NWCs inventory turnover improved slightly last year, but this year NWC expects even more improvement as inventories decrease and inventory turnover is expected to rise to 10x Incorporate that information into the 2017 initial forecast results, as these adjustments to the initial forecast represent the final forecast for 2019. (Hint: Total assets do not change from the initial forecast.)

c. Calculate NWCs forecasted ratios based on its final forecast and compare them with the companys 2018 historical ratios, the 2019 initial forecast ratios, and the industry averages. How does NWC compare with the average firm in its industry, and is the companys financial position expected to improve during the coming year? Explain.

D. Based on the final forecast, calculate NWCs free cash flow for 2019. How does this FCF differ from the FCF forecasted by NWCs initial business as usual forecast?

E. Initially, some NWC managers questioned whether the new facility expansion was necessary, especially as it results in increasing net fixed assets from $500 million to $700 million (a 40% increase). However, after extensive discussion about NWC needing to poison itself for future growth and being flexible and competitive in todays marketplace, NWCs top managers agreed that the expansion was necessary. Among the issues raised by opponents was that NWCs fixed assets were being operated at only 85% of capacity. Assuming that its fixed assets were operating at only 85% of capacity, by how much could sales have increased, both in dollar terms and in percentage terms, before NWC reached full capacity?

F. How would these changes in the following items affect the AFN : (1) the dividends payout ratio, (2) the profit margin (3) the capital intensity ratio, and (4) NWC beginning to buy from its suppliers on terms that permits it to pay after 60 days rather than after 30 days? (Consider each item separately and hold all other things constant.) 2018 2019E $ 20 $ 25 240 300 240 300 $ 625 625 $1,250 $ 125 190 $ 315 190 500 A. Balance Sheets Cash and equivalents Accounts

2018 2019E $ 20 $ 25 240 300 240 300 $ 625 625 $1,250 $ 125 190 $ 315 190 500 A. Balance Sheets Cash and equivalents Accounts receivable Inventories Total current assets Net fixed assets Total assets Accounts payable and accrued liabilities Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity B. Income Statements Sales Variable costs Fixed costs Earnings before interest and taxes (EBIT) Interest Earnings before taxes (EBT) Taxes (40%) Net income Dividends (30%) Addition to retained earnings $ 500 500 $1,000 $ 100 100 $ 200 100 500 200 $1,000 2018 $2,000.00 1,200.00 700.00 $ 100.00 16.00 84.00 245 $1,250 2019E $2,500.00 1,500.00 875.00 $ 125.00 16.00 $ $ 109.00 33.60 43.60 $ 65.40 $ 50.40 $ 15.12 $ 35.28 $ 19.62 $ 45.78 Comment NWC (2018) 10.00% 2.52 NWC (2019E) 10.00% 2.62 7.20 8.77 43.80 days 43.80 days 8.33 X 8.33 X C. Key Ratios Basic earning power Profit margin Return on equity Days sales outstanding (365 days) Inventory turnover Fixed assets turnover Total assets turnover Total liabilities/assets Times interest earned Current ratio Payout ratio Industry 20.00% 4.00 15.60 32.00 days 11.00 5.00 2.50 36.00% 9.40x 3.00 4.00 4.00 2.00 2.00 40.40% 30.00% 6.25 X 7.81 X 2.50 1.99 30.00% 30.00% 30.00% 2018 2019E $ 20 $ 25 240 300 240 300 $ 625 625 $1,250 $ 125 190 $ 315 190 500 A. Balance Sheets Cash and equivalents Accounts receivable Inventories Total current assets Net fixed assets Total assets Accounts payable and accrued liabilities Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity B. Income Statements Sales Variable costs Fixed costs Earnings before interest and taxes (EBIT) Interest Earnings before taxes (EBT) Taxes (40%) Net income Dividends (30%) Addition to retained earnings $ 500 500 $1,000 $ 100 100 $ 200 100 500 200 $1,000 2018 $2,000.00 1,200.00 700.00 $ 100.00 16.00 84.00 245 $1,250 2019E $2,500.00 1,500.00 875.00 $ 125.00 16.00 $ $ 109.00 33.60 43.60 $ 65.40 $ 50.40 $ 15.12 $ 35.28 $ 19.62 $ 45.78 Comment NWC (2018) 10.00% 2.52 NWC (2019E) 10.00% 2.62 7.20 8.77 43.80 days 43.80 days 8.33 X 8.33 X C. Key Ratios Basic earning power Profit margin Return on equity Days sales outstanding (365 days) Inventory turnover Fixed assets turnover Total assets turnover Total liabilities/assets Times interest earned Current ratio Payout ratio Industry 20.00% 4.00 15.60 32.00 days 11.00 5.00 2.50 36.00% 9.40x 3.00 4.00 4.00 2.00 2.00 40.40% 30.00% 6.25 X 7.81 X 2.50 1.99 30.00% 30.00% 30.00%