Problem $3-9$ External Funds Needed

Dahlia Colby, CFO of Charming Florist Limited, has created the firm's pro forma balance

sheet for the next fiscal year. Sales are projected to grow by $10$ percent to $$550$ million.

Current assets, fixed assets, and short$-$term debt are $20$ percent, $80$ percent, and $10$

percent of sales, respectively. Charming Florist pays out $25$ percent of its net income in

dividends. The company currently has $$132$ million of long$-$term debt and $$60$ million in

common stock par value. The profit margin is $10$ percent.

a$.$ Construct the current balance sheet for the firm using the projected sales figure. $($Do

not round intermediate calculations and enter your answers in dollars, not millions

of dollars, rounded to the nearest whole number, e$.$g$.,1,234,567.)$

Answer is complete and correct.

b$.$ Based on Ms$.$ Colby's sales growth forecast, how much does Charming Florist need in

external funds for the upcoming fiscal year? $($Do not round intermediate calculations

and enter your answer in dollars, not millions of dollars, rounded to the nearest

whole number, e$.$g$.,1,234,567.)$

Answer is complete but not entirely correct.

What is the external financing needed?