The Mansfield Corporation had $20$XX sales of $$100$ million. The balance sheet items that vary directly with sales and the profit margin are as follows:

Cash

Accounts receivable

Percent

Inventory

Net capital assets

Accounts payable

$5\%$

$15$

$20$

$40$

$15$

Other payables

$10$

Profit margin after taxes

$10$

The dividend payout rate is $50$ percent of earnings, and the balance in retained earnings at the beginning of $20xY$ was $$33$ million. Common stock and the company's long$-$term bonds are constant at $$10$ million and $$5$ million, respectively. Notes payable are currently $$7$ million.

a$.$ How much additional external capital will be required for next year if sales increada$335$ percent? $($Assume that the company is already operating at full capacity.$)$

b$.$ What will happen to external fund requirements if Mansfield Corporation $1)$ reduces the payout ratio, $2)$ grows at a slower rate, or $3)$ suffers a decline in its profit margin? Discuss all three of these separately with an example for each variable.

Page $131$

c$.$ Prepare a pro forma balance sheet for $20xY,$ assuming that any external funds being acquired will be in the form of notes payable. Disregard the information in part $b$ in answering this question $($that is$,$ use the original information and part $a$ in constructing your pro forma balance sheet$).$

d$.$ Calculate debt to total assets, debt to equity, current ratio, return on assets, and return on equity before and after the sales increase.

e$.$ Calcuiate Mansfield's SGR$.$

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