Practice Problem: Chapter 18 Para este problema: utilice la frmula de AFN y el Pro-Forma 7. Baldwin Products Company anticipates reaching a sales level of $6 million in one year. The company expects earnings after taxes during the next year to equal S400,000. During the past several years, the company has been paying $50,000 in dividends to its stockholders. The company expects to continue this policy for at least the next year. The actual balance sheet and income statement for Baldwin during 2016 follow. Baldwin Products Company Balance Sheet as of December 31, 2016 600,000 500,000 200,000 1,000,000 $2,300,000 Total liabilities and equity $00,000 Accounts payable Notes payable Cash Accounts receivable Inventories Fixed assets, net 200,000 400,000 ,200000Long-term debt 500000 Stockholders' equity Total assets Income Statement for the Year Ending December 31,2016 Sales Expenses, including interest and taxes Earmings after taxes 4,000,000 $3,700,000 5 300000 a. Using the percentage of sales method, calculate the additional financing Baldwin Products will need over the next year at the $6 million sales level. Show the pro forma balance sheet for the company as of December 31,2017, assuming that a sales level of $6 million is reached. Assume that the additional financing needed is obtained in the form of additional notes payable. b. Suppose that the Baldwin Products' management feels that the average collection period on its additional sales-that is, sales over $4 million-will be 60 days, instead of the current level. By what amount will this increase in the average collection period increase the financing needed by the company over the next year? c. If the Baldwin Products' banker requires the company to maintain a current ratio equal to 1.6 or greater, what is the maximum amount of additional financing that can be in the form of bank borrowings (notes payable)? What other potential sources of financing are available to the company