Table 3.1									Table 3.5
Income Statement									Proforam
			2011	2012	2013	2014			Year			2014	2015	2016
Net Sales			$ 11,190	$ 13,764	$ 16,104	$ 20,613			Net Sales			$ 20,613
Cost of goods sold			$ 9,400	$ 11,699	$ 13,688	$ 17,727			Growth rate in net sales				25%
Gross profit			$ 1,790	$ 2,065	$ 2,416	$ 2,886			Cost of goods sold/net sales				86%
Expenses:									Gen sell and admin				12%
General Selling and Admin			$ 1,019	$ 1,239	$ 1,610	$ 2,267			Long-Term debt			$ 760	$ 660
Net interest expense			$ 100	$ 103	$ 110	$ 90			Currnet portion long-term debt			$ 100	$ 100
Earnings before taxes			$ 671	$ 723	$ 696	$ 529			Interest rate				10%
Tax			$ 302	$ 325	$ 313	$ 238			Tax rate				45%
Earnings after tax			$ 369	$ 398	$ 383	$ 291			Divided/earnings after tax				50%
									Current assets/net sales				29%
									Net fixed assets				$ 280
									Current liabilities/net sales				14.5%
Balance Sheet									Owner's equity			$ 1,730
Assets
Current Assets									Year
Cash and securityies			$ 671	$ 551	$ 644	$ 412			Net sales				$ 25,766
Accounts receivable			$ 1,343	$ 1,789	$ 2,094	$ 2,886			Cost of goods sold				$ 22,159
Inventories			$ 1,119	$ 1,376	$ 1,932	$ 2,267			Gross profit				$ 3,607
Prepaid expenses			$ 14	$ 12	$ 15	$ 18			Gen sell and admin				$ 3,092
Total current assets			$ 3,147	$ 3,728	$ 4,685	$ 5,583			Interest expense				$ 231
Net fixed assets			$ 128	$ 124	$ 295	$ 284			Earnings before tax				$ 285
Total assets			$ 3,275	$ 3,852	$ 4,980	$ 5,870			Tax				$ 128
									Earnings after tax				$ 156
Liabilities and Owners' equitiy									Dividends paid				$ 78
Current liabilities:									Additionsl to retained earnings				$ 78
Bank loan			$ 50	$ 50	$ 50	$ 50
Accounts payable			$ 1,007	$ 1,443	$ 2,426	$ 3,212			Balance Sheet
Current portion long-term debt			$ 60	$ 50	$ 50	$ 100			Current assets				$ 7,472
Accrued wages			$ 5	$ 7	$ 10	$ 18			Net fixed assets				$ 280
total current liabilities			$ 1,122	$ 1,550	$ 2,536	$ 3,380			Total assets				$ 7,752
Long-Term debt			$ 960	$ 910	$ 860	$ 760
Common stock			$ 150	$ 150	$ 150	$ 150			Current liabilties				$ 3,736
Retained earnings			$ 1,043	$ 1,242	$ 1,434	$ 1,580			Long-term debt				$ 660
Total liabilities and owners equity			$ 3,275	$ 3,852	$ 4,980	$ 5,870			Owners's equity				$ 1,808
									Total liabilities and owner's equity				$ 6,204
									External funding required				$ 1,548

Table 3.1 presents R&E's Suppies's financial statement for period 2011 through 2014, and Table 3.5 presents a proforma financial forecast for 2015. Use the information in these tables to answer the following questions.

a) Calculate R&E sustainable growth rate in each year from 2012-2015

b) Comparing the company's sustainable growth rate with its actual and projected growth rates in sales over these years, what growth management problems does R&E appear to face in this period?

c) How did the company cope with their problems? Do you see any difficulties with the way it addressed its growth problems over this period? If so, what are they?

d) What advice would you offer management regarding managing future growth?