The Suzy Q Muffins Company has the following financial statements, which are representative of the company's historical average. Income Statement Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends $148,900 117,631 31,269 1,489 29,780 14,890 $14,890 $7,445 Assets Cash Account receivabl Inventory Current assets ital assets Balance Sheet Liabilities and Shareholders' Equity $3,723 Accounts payable $3,723 7,445 Accrued wages 745 11,168 Accrued taxes 1,489 22,335 Current liabilities 5,956 52,115 Notes pa ole 5,212 Long-term debt 11,168 Shareholders' Equity Common shares 14,890 Retained earnings 37,225 Total liabilities $74,450 and shareholders' equity $74,450 Total assets Suzy Q Muffins is expecting a 20 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of capital assets; instead it will be done through more efficient asset utilization in the existing stores. Of liabiilities, only current liabilities vary directly with sales. a. Using the percent-of-sales method, determine whether Suzy Q Muffins has external financing needs. (9 marks) % expected increase 20% Profit margin Payout ratio Change in sales ($) Spontaneous assets as % of sales Spontaneous liabilities as % of sales Does your company require funds? Explain based on your calculations (2 marks): Change in assets Change in liabilities Change in retained earnings External funding needed C. Calculate the current ratio and total debt to assets ratio for each year ( 4 marks). Discuss your findings (4 marks) b. Prepare a proforma balance sheet with any financing adjustment made to notes payable. (8 marks) Balance Sheet Assets Liabilities and Shareholders' Equity Cash Accounts payable Account receivable Accrued wages Inventory Accrued taxes Current assets Current liabilities Capital assets Notes payable Long-term debt Shareholders' Equity Common shares Retained earnings Total liabilities Total assets and shareholders' equity