The most recent financial statements for ROSENGARTEN CORPORATION follow. Next years sales are projected to grow by 25 percent.

The tax rate and the dividend payout rate will remain constant. Costs, current assets, fixed assets, and accounts payable increase spontaneously with sales.

The firm is operating at full capacity and no new debt or equity is issued.

ROSENGARTEN CORPORATION 2019 Income Statement
Sales		1,000
Costs		833
Taxable income		167
Taxes (21%)		35
Net income		132
Dividends	44
Addition to retained earnings	88

ROSENGARTEN CORPORATION 2019 Balance Sheet
Assets				Liabilities and Owners Equity
Current assets				Current liabilities
Cash	160			Accounts payable	300
Accounts receivable	440			Notes payable	100
Inventory	600			Total	400
Total	1,200			Long-term debt	800
Fixed assets				Owners equity
Net plant and equipment	1,800			Capital stock	800
				Retained earnings	1,000
				Total	1,800
Total assets	3,000			Total liabilities and owners equity	3,000

Instructions:

1. Calculate the internal growth rate for 2019.

2. Calculate the sustainable growth rate for 2019.

3. Prepare Pro forma Income Statement for 2020.

4. Prepare Pro forma Balance Sheet for 2020.

5. Calculate the amount of external financing needed for 2020.