U. TIUW WUUU you answer IdILA LIIG 4. (Sustainable Sales Growth Rates and Additional Funds Needed) The Minoso Corporation anticipates a 20 percent increase in sales for 2017 over its 2016 level. Minoso is currently operating at full capacitu and thus expects to increase its investment in both current and fixed assets in order to support the increase in forecasted sales. MINOSO CORPORATION INCOME STATEMENT FOR DECEMBER 31, 2016 (THOUSANDS OF DOLLARS) Sales $15,000 Operating expenses -13,000 EBIT 2,000 Interest 400 1,600 Taxes (40%) 640 Net income 960 Cash dividends (40%) Added retained earnings $ 576 EBT 384 BALANCE SHEET AS OF DECEMBER 31, 2016 (THOUSANDS OF DOLLARS) Cash $ 1,000 Accounts payable $ 1,600 Accounts receivable 2,000 Bank Loan 1,800 Inventories 2,200 Accrued liabilities 1,200 Total current assets 5,200 Total current liabilities 4,600 Long-term debt 2,200 Common stock 2,400 Fixed assets, net 6,800 Retained earnings 2,800 Total assets $12,000 Total liabilities & equity $12,000 A. Estimate Minoso's sustainable sales growth rate based on the financial data relationships for 2016. In making your estimate, calculate each component of the firm's operating performance and financial policies. B. Estimate the additional funds needed (AFN) for 2017 using the formula or equation method. Chapter 9: Projecting Financial Statements 347 C. Briefly describe differences in calculation assumptions between the sustainable growth rate and addi- tional funds needed models. WORPORATION