The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.30.

INCOME STATEMENT, 2019
Sales				$	300,000
Costs					200,000
EBIT					100,000
Interest expense					20,000
Taxable income					80,000
Taxes (at 21%)					16,800
Net income					63,200
Dividends	$	18,960
Addition to retained earnings	$	44,240

BALANCE SHEET, YEAR-END, 2019
Assets					Liabilities
Current assets					Current liabilities
Cash	$	6,000			Accounts payable	$	13,000
Accounts receivable		11,000			Total current liabilities	$	13,000
Inventories		33,000			Long-term debt		200,000
Total current assets	$	50,000			Stockholders equity
Net plant and equipment		240,000			Common stock plus additional paid-in capital		15,000
					Retained earnings		62,000
Total assets	$	290,000			Total liabilities plus stockholders' equity	$	290,000

Required:

Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1.

a. How much external capital will the company require in 2023?

b. What will be the companys debt ratio at the end of 2023?

Check my work The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.30. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $300,000 200,000 100,000 20,000 80,000 16,800 63,200 $18,960 $ 44,240 Assets Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment BALANCE SHEET, YEAR-END, 2019 Liabilities Current liabilities $ 6,000 Accounts payable 11,000 Total current liabilities 33,000 Long-term debt $ 50,000 Stockholders' equity 240,000 Common stock plus additional paid-in capital Retained earnings $ 290,000 Total liabilities plus stockholders' equity $ 13,000 $ 13,000 200,000 15,000 62,000 $ 290,000 Total assets Required: Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1. a. How much external capital will the company require in 2023? b. What will be the company's debt ratio at the end of 2023? Check my work The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 30% a year for at least the next 4 years. Both current assets and accounts payable are projected to rise in proportion to sales. The firm is currently operating at full capacity, so it plans to increase fixed assets in proportion to sales. Interest expense will equal 10% of long-term debt outstanding at the start of the year. The firm will maintain a dividend payout ratio of 0.30. INCOME STATEMENT, 2019 Sales Costs EBIT Interest expense Taxable income Taxes (at 21%) Net income Dividends Addition to retained earnings $300,000 200,000 100,000 20,000 80,000 16,800 63,200 $18,960 $ 44,240 Assets Current assets Cash Accounts receivable Inventories Total current assets Net plant and equipment BALANCE SHEET, YEAR-END, 2019 Liabilities Current liabilities $ 6,000 Accounts payable 11,000 Total current liabilities 33,000 Long-term debt $ 50,000 Stockholders' equity 240,000 Common stock plus additional paid-in capital Retained earnings $ 290,000 Total liabilities plus stockholders' equity $ 13,000 $ 13,000 200,000 15,000 62,000 $ 290,000 Total assets Required: Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1. a. How much external capital will the company require in 2023? b. What will be the company's debt ratio at the end of 2023