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Comparative income statements and balance sheets for Merck ($ millions) Merc' follow: Year 2 Year 1 Year 2 Year 1 Income Statement Deferred income taxes and other liabilities . . . . ... .- 11,614 11,768 Net sales . .. $47,716 $40,343 Long-term debt 4.799 3.601 Cost of goods . . . .. 28,977 22,444 Total noncurrent liabilities .. 16,413 15.369 Gross profit . . . 18,739 17,899 30 Selling, general, and administrative expense. . 6,531 6,469 Common stock 30 Capital surplus 6,907 6.266 Depreciation and amortization expense . .- 1,464 1,277 Retained earnings 31,500 27.395 Interest expense . .. . . 342 329 Treasury stock. (22.387) (18.858) Income before tax. . . . 10,402 9,824 Shareholders' equity. .... 16.050 14.833 Income tax expense 3,121 3,002 $44,007 $40.154 Net income. . . . . $ 7,282 $ 6,822 Total liabilities and equity . .. . Outstanding shares .. 2,976 2,968 Required: Balance Sheet a. Use the following ratios to prepare a projected income statement, balance sheet, and statement of cash flows Cash $ 3,287 $ 4,255 for Year 3. Receivables 5,215 5,262 18.27% Inventories . . . 3,579 3,022 Sales growth . . . . . . Gross profit margin. ... 39.27% Other current assets. 880 1,059 Selling, general, and administrative expense/ Sales . .. ... - . . . . 13.69% Total current assets. 12,961 13,598 Depreciation expense/Prior-year property, plant, & equipment (gross] ..... 8.76% Interest expense/Prior-year long-term debt. . . 4.94% Property, plant, and equipment 18,956 16,707 Income tax expense/Pretax income . 30.00% Accumulated depreciation . . 5,853 5,225 Accounts receivable turnover (Sales/Accounts receivable) . . . . . . . 9.15 Net property, plant, and equipment 13,103 11,482 Inventory turnover (Cost of goods sold/Inventory) . . . . ... 8.10 15,075 Accounts payable turnover (Cost of goods sold/Accounts payable) . 4.91 Other noncurrent assets. . . .. 17,942 Taxes payable/Tax expense . . . . . . . . 50.41% Total assets . .. $44,006 $40,155 Total assets/Stockholders' equity (financial leverage) 2.35 Accounts payable and accrued liabilities. . $ 5,904 $ 5,391 Dividends per share . . . ... . . . $ 1.06 Short-term debt and current maturities of long-term debt. ... 4,067 3,319 Capital expenditures/Sales . . 9.04% Income taxes payable. ... 1,573 1,244 b. Based on your initial projections, how much external financing (long-term debt and/or stockholders' equity) will Merck need to fund its growth at projected increases in sales? Total current liabilities . 11,544 9,954