• The most recent financial statement for New South, Inc appear below.
• Sales for 2021 are projected to grow by 20%
• Interest expenses will remain constant
• Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales.
• If the firm is operating at full capacity and no new debt or equity is issued, what External Financing is needed to support the 20% growth rate in sales?

New South Inc
Income Statement
For the year ending 2020
Sales		836,100
Costs		650,700
other expenses		17,100
EBIT		168,300
Interest expense		12,600
Taxable income		155,700
Taxes	35%	54,495
Net Income		101,205
	Dividends		30,300
	Additions to RE		70,905

New South Inc
Balance Sheet
Dec 31,2020
Assets
Current Assets
Cash		24,035
A/R		38,665
Inventory		82,555
Total CA		145,255
Fixed Assets
Net PPE		392,350
Total Assets		537,605
Liabilities and Owners Equity
Current Liabilities
AP		64,600
Notes payable		16,150
Total CL		80,750
Long term debt		150,000
Total liabilities		230,750
Owners' equity
Common stock		130,000
RE		176,855
total OE		306,855
Total L + OE		537,605

REQUIREMENTS:

1. Prepare Projected BS and IS
2. Calculate EFN
3. Based on the projected EFN, how are you going to decide
   1. EFN through debt, or
   2. EFN through equity. Show your calculations
4. Based on your answer to no.3, calculate the following (assuming par value of stock is 100)
   1. New book value per share after EFN
   2. Additional shares issued at 100 par
   3. Total new outstanding shares after EFN
   4. Total equity after EFN
   5. Assumed market value/share after EFN is 350
   6. New Enterprise Value after EFN
5. Calculate ROE using DuPont Identity for the base year and the projected year
6. Analyze FS through
   1. common size,
   2. trend,
   3. ratios e.g. Liquidity, profitability, solvency, book values, market values