The Tomas School of Falconrys most recent financial statements are shown below. Assets and costs are proportional to sales; debt and equity are not. Thirty percent (30%) Net Income is paid out as dividends (this is a policy that the firm will not change for the foreseeable future). Next years sales are projected to be $8,614 (an 18% increase). What is the external financing needed (EFN)? Use the percent of sales approach to solve the problem. Relative to 18% what can you say about the firms Internal Growth Rate, is it above or below the forecasted rate of increase in sales? What can you say about thefirms SGR?

INCOME STATEMENT Sales $ 7,300.00 Costs $ 3,720.00 Depr $ 1,240.00 EBIT $ 2,340.00 int $ 500.00 EBT $ 1,840.00 tax 20% $ 368.00 $ 1,472.00 dividends $ 441.60 NI BALANCE SHEET Assets Current Long Term Total $ 2,000.00 $ 15,100.00 $ 17,100.00 Liabilities Current Long Term Total $ 1,100.00 $ 6,000.00 $ 7,100.00 Equity CS & Surplus $ 5,000.00 Retained Earning $ 5,000.00 Total Equity $ 10,000.00 Total Liab & Equity $17,100.00