The Longbranch Western Wear Company has the following financial statements, which are representative of the company's historical average. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Income Statement Earnings after taxes Dividends Assets Cash Accounts receivable Inventory Current assets Capital assets Total assets $151,000 $250,000 193,400 $ 56,600 3,600 $ 53,000 13,000 Balance Sheet $ 40,000 $ 22,000 Liabilities and Shareholders' Equity $10,000 Accounts payable 26,000 Accrued wages 29,000 Accrued taxes $65,000 Current liabilities 86,000 Notes payable Long-term debt Common stock Retained earnings Total liabilities and equity in (Click to select) Drow Longbranch is expecting a 25 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead, it will be done through more efficient asset utilization in the existing stores. Of liabilities, only current liabilities vary directly with sales. a. Using a percent-of-sales method, determine whether Longbranch Western Wear has external financing needs. (Input the amount as a positive value.) The firm (Click to select) $17,600 2,800 14,600 $35,000 8,600 23,000 36,000 48,400 $151,000 9 of 10 www Next b. Prepare a pro forma balance sheet with any financing adjustment made to notes payable and excess, if any, shall reduce long term debt. (Input all answers as positive values. Be sure to list the assets and liabilities in order of their liquidity. Do not leave any empty spaces; input a 0 wherever it is required.) (Click to select) (Click to select) (Click to select) Current assets Current assets (Click to select) Total assets + + Current ratio Total debt/ assets Year 1 Balance Sheet X (Click to select) (Click to select) (Click to select) Liabilities Current liabilities (Click to select) (Click to select) (Click to select) (Click to select) c. Calculate the current ratio and total debt to assets ratio for each year. (Round the final answers to 2 decimal places.) + Year 2 Total liabilities and equity X + + + +