The 2019 financial statements for Growth Industries are presented below. Sales and costs are projected to grow at 20% 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 0.60.

INCOME STATEMENT, 2019
Sales				$	370,000
Costs					235,000
EBIT					135,000
Interest expense					27,000
Taxable income					108,000
Taxes (at 21%)					22,680
Net income					85,320
Dividends	$	51,192
Addition to retained earnings	$	34,128

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		270,000
Total current assets	$	50,000			Stockholders equity
Net plant and equipment		310,000			Common stock plus additional paid-in capital		15,000
					Retained earnings		62,000
Total assets	$	360,000			Total liabilities plus stockholders' equity	$	360,000

Construct a spreadsheet model for Growth Industries similar to the one in Spreadsheet 18.1. (Do not round intermediate calculations. Round your answer to 1 decimal place. Enter your answers in thousands and Enter the "Debt ratio" rounded to 2 decimal places.)

A Long-Term Planning Model for Growth Industries
Income Statement	2019	2020	2021	2022	2023
Revenue	370.0
Cost of goods sold	235.0
EBIT	135.0
Interest expense	27.0
Earnings before taxes	108.0
Taxes at 50%	22.7
Net income	85.3
Dividends	51.2
Reinvested earnings	34.1
Balance Sheet (year-end)
Assets
Net working capital	37.0
Net fixed assets	310.0
Total assets	347.0
Liabilities and equity
Long-term debt	270.0
Shareholders' equity	77.0
Total liab. & share. equity	347.0
Sources and Uses of Funds
Operating cash flow
Increase in working capital
Investments in fixed assets
Dividends
Total uses of cash
Required external financing
Financial Ratios
Debt ratio
Interest coverage

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?