Please help me to (1) complete the projected income statement and projected balance sheet (2) determine the amount of additional external financing required during the coming fiscal year & (3) assess the reasonableness of the projections in relation to the company's estimated cost of equity capital, r_E, and its sustainable sales growth rate.

The CEO of North American Manufacturing Company has asked you to (a) complete the projected income statement and projected balance sheet for the coming fiscal year (FY) of the company using the information set forth below. She has also asked you to (b) determine the amount of any additional external financing the company will require during the coming fiscal year and (c) assess the reasonableness of the projections in relation to the company's estimated cost of equity capital, rE, and its sustainable sales growth rate. 1. Use the average gross margin during the preceding two-year period to project the amount of gross profit. 2. Use the average ratio of "all other S&A-to-sales revenue" during the preceding two-year period to project the amount of all other S&A expense. 3. Use the average amount of R&D expense during the two preceding FYs to project the amount of this expense. 4. The estimated combined effective income tax rate during the projected FY is 0.40 (40.0 percent). 5. Project the balances of cash and cash equivalents, total current assets, and total liabilities as \"residual amounts\" using the general methodology examined in Topic 9 of the course. Project total assets using the projected balance of total liabilities and shareholders' equity. Project the balance of total liabilities and stockholders' equity based on projected total stockholders' equity and a targeted total debt ratio (ratio of total liabilities-to-total stockholders' equity) of 0.70 (70 percent). 6. Project the balance of accounts receivable (AR) using a projected average AR collection period ratio of 45 days. 7. Project the balance of inventory using a projected average days to sell inventory ratio of 90 days. 8. Project the balance of other assets using the average balance of this item during the two preceding FYs. 9. Project the balance of accounts payable (AP) using projected "cash costs" and a projected average AP payment period of 45 days. "Cash costs" include projected COGS and operating expenses, excluding depreciation. 10. Project the balance of dividends payable as the dividends that the company expects to declare during the final week of the projected FY (based on net income for that year) and pay early in the next FY. The company's payout ratio (dividend policy) is 0.40 (40 percent). 11. The company plans no issuances (or repurchases) of common stock during the projected FY. 12. Project retained earnings (RE) using projected net income and projected dividends to be declared near the end of the projected FY. 13. The company's estimated cost of equity capital, rE, is 0.227 (22.7 percent), computed using CAPM as: rF + x (rM - rF) = 0.04 + 2.2 x (0.125 - 0.04) Continued 1 Continued a. Projected income statement Actual (historical) (A Sales revenue ) Projected Computational Notes (Formulas or equations used) 20X0 20X1 20X2 $48,500,0 00 50,900,00 0 $ 55,000,000 Given 7,300,000 Given Cost of goods sold (COGS): (B ) Deprec. of manufacturing PP&E (C ) All other COGS ( D ) Total COGS (E ) Gross profit (F ) Gross margin 6,695,000 6,985,000 25,800,00 0 26,100,00 0 32,495,00 0 33,085,00 0 $ 16,005,00 0 17,815,00 0 33.0% 35.0% $ 360,000 520,000 5,820,000 6,108,000 1,290,000 1,510,000 Operating expenses: Selling and admin. (S&A) exp.: ( G ) Deprec. of non-mfg PP&E ( H ) All other S&A expense (I ) Research and devel. (R&D) exp. (J ) Other operating expenses 135,000 (K ) Total operating expenses 7,605,000 8,315,000 8,400,000 9,500,000 (L ) Operating income ( M ) Interest on debt ( N ) Income from investments (660,000) 10,000 177,000 (750,000) 10,000 $ 700,000 Given 200,000 Given (810,000) Given 10,000 Given 2 ( O ) Gain (loss) on PP&E disposals (P ) Income before taxes ( Q ) Provision for income taxes (R Net income ) - (94,000) 7,750,000 8,666,000 3,100,000 3,466,000 $ 4,650,000 5,200,000 - Given Continued 3 Continued a. (continued) Projected balance sheet Assets: Current assets: Actual (historical) 20X0 20X1 (A ) Cash and cash equivalents $ 450,000 690,000 (B ) Investment securities 200,000 200,000 (C ) Accounts receivable 6,060,00 0 6,360,000 (D ) Inventory 8,120,00 0 8,270,000 (E ) Total current assets 14,830,0 00 15,520,00 0 Current ratio (working capital) ratio 1.0 Projected Computational Notes 20X2 (Formulas or equations used) 200,000 Given 1.0 (F ) PP&E, at cost 38,510,0 00 45,790,00 0 53,800,000 Given (G ) Accumulated depreciation of PP&E 14,260,0 00 20,340,00 0 26,300,000 Given (H PP&E, net ) 24,250,0 00 25,450,00 0 (I ) Other assets 600,000 900,000 (J) Total assets $ 39,680,00 0 41,870,00 0 $ 4,130,000 4,240,000 Liabilities: Current liabilities: (K ) Accounts payable (L ) Accrued income taxes payable 780,000 870,000 ( M ) Dividends payable 1,860,00 0 2,080,000 (N Bank notes payable - ) current 7,800,00 0 8,000,000 (O Accrued interest payable ) 170,000 190,000 (P ) 14,740,0 00 15,380,00 0 Total current liabilities 900,000 Given 8,800,000 Given 200,000 Given 4 (Q Bank notes payable - ) noncurrent 4,800,00 0 3,230,000 (R ) 19,540,0 00 18,610,00 0 Total liabilities Total debt ratio 0.97 0.80 Stockholders' equity: (S ) Common stock, at par 12,500,0 00 12,500,00 0 (T ) Additional paid-in capital 2,600,00 0 2,600,000 (U ) Retained earnings 5,040,00 0 8,160,000 (V ) Total stockholders' equity 20,140,0 00 23,260,00 0 ( W ) Total liab. and stockhldrs' equity $ 39,680,00 0 41,870,00 0 Continued 5 Continued b. Determine the amount of any additional external financing the company will require during the coming FY. Show computations in good form and label properly all amounts presented. c. Assess the reasonableness of the projected financial statements in relation to the company's estimated cost of equity capital, rE, and its sustainable sales growth rate. Actual (historical) 20X0 Return on average common equity (ROCE) ratio Net income (available to common stockholders) 20X1 24.8% 24.0% $ 4,650,000 5,200,000 Projected 20X2 % $ Total stockholders' equity, beginning of FY 17,350,000 20,140,000 $ Total stockholders' equity, end of FY 20,140,000 23,260,000 $ $ 18,745,000 21,700,000 $ Average total stockholders' equity Sustainable rate of sales growth % Net income (available to common stockholders) $ Beginning-of-year shareholders' equity $ Payout ratio % Assessment of projected ROCE and sustainable growth rate in sales ratios less that 100 words please Replace this text with your analysis. 6