River Company's 2021 financial statements can be found below.

Income Statement
Sales	220,000
Expenses	168,000
EBIT	52,000
Interest	2,000
EBT	50,000
Taxes	15,000
Earnings After Taxes	35,000
Dividends	12,000

Balance Sheet
Assets		Liabilities and Shareholders' Equity
Cash	20,000		Accounts Payable	4,000
Accounts Receivable	10,000		Accrued Wages	2,000
Inventory	15,000		Accrued Taxes	2,000
Capital Assets	70,000		Notes Payable	7,000
			Long Term Debt	25,000
			Common Stock at Par	20,000
			Paid in Capital	5,000
			Retained Earnings	50,000

Sales is expected to increase by 25% next year, this increase is expected to be carried out without any capital asset expansion. It will be done through more efficient utilization of current assets in the existing stores. The dividend payout ratio will remain unchanged and forecasted taxes are $26,200. Management is concerned about whether the company will need additional external funds.

1. Using the percent of sales method, determine whether the company will need external financing needs.
2. Create a pro forma income statement and balance sheet. Any external financing requirements will require financial adjustments to be made to the notes payable account. If external financing is not required, the excess funds will first be used to reduce the notes payable, the remaining difference will go towards reducing long-term debt.
3. Calculate the current ratio and total debt to assets ratio for 2021 and 2022.