Question : The ABC Company has forecast a sales growth rate of ......... Percent (see appendix) for next year. The current financial statements are shown here:

Current assets, fixed assets and short term debt are linked with sales revenue. Tax rate and dividend payout will remain the same.

a. Construct the firm's pro forma income statement and balance sheet for next year and confirm the external funds needed that you calculated in part (a).

b. Calculate the sustainable growth rate for the company.

c. Why the company may not be able to maintain the targeted sustainable growth rate? Explain.

Income Statement sales growth rate 14.5% Sales Costs Taxable Income -Taxes Net Income Amount (Tk.) 26,000 21,000 5,000 1,350 3,650 Dividends Addition to Retained Earnings 1,095 2,555 Balance Sheet Assets Current Assets Amount (Tk) 7,200 Liabilities & Equity Short Term Debt Long Term Debt Total Liabilities Amount (Tk.) 5,200 6,000 11,200 Fixed Assets 17,200 3,200 10,000 Common Stock Accumulated Retained Earnings Total Equity Total Liabilities & Equity Total Assets 24.400 13,200 24.400