Sales for 2009 were $350 million, while net income for the year was $10.5 million. Upton paid dividends of $4.2 million to common stockholders. The firm is operating at full capacity. Assume that all ratios remain constant.
a. If sales are projected to increase by $70 million, or 20%, during 2010, use the AFN equation to determine Upton's projected external capital requirements.
b. Use the forecasted financial statement method to construct Upton's pro forma balance sheet for December 31, 2010. Assume that all external capital requirements are met by bank loans and are reflected in notes payable. Assume Upton's profits margin and dividend payout ratio remain constant.