The financial statements of ABC Ltd. for the financial year ended 30 June 2016, are given below. The companys revenues are projected to grow at a rate of 25 per cent in the 2016-17 financial year, and all financial statement accounts will directly vary with sales.

(a) Based on the projected revenue growth of 25 per cent, develop a pro-forma balance sheet and an income statement for the 2016-17 financial year.

(b) Assume now that equity accounts do not vary directly with sales but change when retained earnings change or new equity is issued. The company pays 75 per cent of its profit as dividends every year. In addition, the company plans to expand production capacity by acquiring additional equipment. This will cost the company $10 million. The company has no plans to issue new equity this year. Prepare a pro-forma balance sheet using this information. Any funds that need to be raised (in addition to changes in current liabilities) will be in the form of long-term debt.

(c) Based on the information in part (b), calculate:

i. the External Financing Needed

ii. the Internal Growth Rate

iii. the Sustainable Growth Rate

Please provide the detailed solution with the steps

Assets Cash Accounts receivable Inventories Balance sheet Liabilities and shareholders' equity $ 3349 239 Accounts payable 5830 754 Notes payables 22 267 674 $ 9041 679 4857 496 Total current assets $ 31 447 667 Total current liabilities Net fixed assets Other assets 43362 482 1 748 906 Long-term debt Ordinary shares Retained earnings Total liabilities and equity $13 899 175 29 731 406 19 987 500 12 940 974 Total assets $ 76559 055 $76 559 055 Income statement Revenues Costs EBITDA Depreciation EBIT Interest EBT Tax (30%) Profit $193 212 500 145265625 $ 47 946 875 23318 750 $ 24628 125 11 935 869 $ 12 692 256 3 807 677 $ 8884579 Assets Cash Accounts receivable Inventories Balance sheet Liabilities and shareholders' equity $ 3349 239 Accounts payable 5830 754 Notes payables 22 267 674 $ 9041 679 4857 496 Total current assets $ 31 447 667 Total current liabilities Net fixed assets Other assets 43362 482 1 748 906 Long-term debt Ordinary shares Retained earnings Total liabilities and equity $13 899 175 29 731 406 19 987 500 12 940 974 Total assets $ 76559 055 $76 559 055 Income statement Revenues Costs EBITDA Depreciation EBIT Interest EBT Tax (30%) Profit $193 212 500 145265625 $ 47 946 875 23318 750 $ 24628 125 11 935 869 $ 12 692 256 3 807 677 $ 8884579