Roger Barton is expecting 30% growth in revenues for 2021. Our calculations show that if revenues do not change, the free cash flow of the company will be equal to 0. However, if revenues grow by 30%, the free cash flow will be equal to -$300.000. Assuming the growth realizes in 2021, what do you recommend the company to do? How can it cope with the cash balance?( List and briefly discuss (with one or two sentence(s)) the ways to improve cash balance (I mentioned in the lecture videos, you can also find them in your book). Please add long-run financing in your discussions.)

Exhibit 1 Nelson Nurseries Projected Nelson Nurseries Financial Summary in thousands of dollars) 2017 2018 2019 2020 Profit and Loss Statement Revenue Cost of goods sold Gross profit SG&A expense Depreciation Operating profit Taxes Net profit 788.5 402.9 385.6 301.2 34.2 50.2 17.6 32.6 807.6 428.8 378.8 302.0 38.4 38.4 13.1 25.3 908.2 437.7 470.5 356.0 36.3 78.2 26.2 52.0 1048.8 503.4 545.4 404.5 40.9 100.0 39.2 60.8 Balance Sheet Cash Accounts receivable Inventory' Other current assets Current assets Net fixed assets Total assets 120.1 90.6 468.3 20.9 699.9 332.1 1032.0 105.2 99.5 507.6 19.3 731.6 332.5 1064.1 66.8 119.5 523.4 22.6 732.3 384.3 1116.6 9.4 146.4 656.9 20.9 833.6 347.9 1181.5 Accounts payable Wages payable Other payables Current liabilities Net worth 6.0 19.7 10.2 35.9 996.1 5.3 22.0 15.4 42.7 1021.4 4.5 22.1 16.6 43.2 1073.4 5.0 24.4 17.9 47.3 1134.2 Capital expenditure Purchases 22.0 140.8 38.8 145.2 88.1 161.2 4.5 185.1 Exhibit 2 Nelson Nurseries Financial Ratio Analysis of Nelson Nurseries and Benchmarking 2017 2018 2019 2020 Benchmark 2.9% 2.4% 12.5% 15.5% (1.8)% 48.9% 46.9% 51.8% 52.0% 48.9% Revenue growth Gross margin (gross profit/ revenue) Operating margin (operating profit/ revenue) Net profit margin (net profit / revenue) 6.4% 4.8% 8.6% 9.5% 7.6% 4.1% 3.1% 5.7% 5.8% 2.8% 3.2% 2.4% 4.7% 5.1% 2.9% Return on assets (net profit/total assets) Return on capital (net profit/total capital) 3.3% 2.5% 4.8% 5.4% 4.0% 41.9 45.0 48.0 50.9 21.8 424.2 432.1 436.5 476.3 386.3 Receivable days (accounts receivable [AR] / revenue 365) Inventory days (inventory/cost of goods sold [COGS] 365) Payable days (accounts payable [AP] / purchases * 365) Net fixed assets (NFA) turnover (revenue / NFA) 15.6 13.3 10.2 9.9 26.9 2.4 2.4 2.4 3.0 2.7