The most recent financial statements for GPS, Inc., are shown below. Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,400 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $21,840. What is the external financing needed? Step 1: Calculate the % increase in sales. Calculate first year's payout ratio Step 2: Prepare pro forma statements. Income Statement Balance Sheet Year 1 Year 2 Year 1 Year 2 Sales $ 19,500 Assets $ 98,000 Costs 15,000 Taxable inc. 4,500 Liabilities $ 52,500 Taxes (40%) 1,800 Equity 45,500 Net income $ 2,700 Total $ 93,000 Dividends Statement Shareholder's Equity External Financing Needed: Year 2 Year 1 Liabilities Beginning Equity Year 2 Liabilities + Net Income ENE - Dividends Ending Equity