Question 4 (8 Marks) Gregson Foundries Ltd. (GFL) has a fiscal year end of September 30 and its statements for 2019 and 2020 are below. The firm is anticipating an excellent year for 2021, forecasting sales to increase by 8% in 2021 to $59.13 million. As the firm only has sufficient capacity for sales of up to $60 million, CAPEX for 2021 is expected to be $4 million. Fixed expenses are expected to increase by $1,000,000. Tobias Gregson, Founder and CEO, is planning to withdraw $5 million in dividends in 2021. Interest is 8% of the previous year's long term debt and Gregson has an option to make a principal payment on the debt of $4 million at the end of 2021, which they intend to exercise. The rate earned on marketable securities is so low at this time that it is being forecast at 0%. The marketable securities can only be bought and sold in multiples of $1 million and the line of credit is drawn in multiples of $1 million as well. As the firm is growing rapidly, Tobias has decided to change the target range for the cash balance to between $3 million and $4 million, and adjusting the marketable securities balance or drawing on their unused line of credit, as necessary. Depreciation, which is included in Fixed Expenses on the Income Statement, is 20% of the preceding year's Net Fixed Assets value plus 10% of the current year CAPEX. Required: Using the percentage of sales method, forecast GFL's working capital needs for 2021. Use "Cash", (and if necessary to keep cash within the specified target range, "Marketable Securities" and "Line of Credit") as the plug variable(s). For your convenience, if needed, you are provided the entire set of financial statements are provided, but only the unshaded working capital items will be marked. Place your forecast values in the boxes. Sales COGS Gross Margin EDIT Interest Prof Before Tax Taxes Net Income Cash Aus Accounts Be Inventory Prepaid Expe Current Assets Fixed Assets Less: Acc. Depreciation Not Fed Assets Labs & Ey Accounts Payable & Accrual Line of Od Long Term Det Common Shams Retained in Total Labi& Equly Dividends Change in Retained amings 2019 54.100 20,440 9.260 1.200 30,660 32.850 21,400 21.400 8.060 2418 5.642 2.000 2.000 4,000 2,044 16.352 2000 54.750 21.900 5.000 642 11450 1.200 10.250 2015 7.175 2,484 3,000 8.700 4.818 2.100 21.252 24,000 24,000 7.,200 10.500 16.800 13.440 33.152 34,600 2,044 2,400 15,000 15.000 3,000 3.000 43.306 14.283 31.152 34,692 6,000 1.175 2001 59,130 22.400 28.000 11.000 3,000 5,000