Groff Graphics Company owns and operates a small chain of sportswear stores located near colleges and universities. Groff has experienced significant growth in recent years. The following data are available for Groff:

Groff Graphics Company
Consolidated Balance Sheets
(In thousands)

LIABILITIES AND STOCKHOLDERS€™ EQUITY

Required:
1. Calculate how much Groff€™s sales, net income, and assets have grown during these three years.
2. Explain how Groff has financed the increase in assets.
3. Discuss whether Groff€™s liquidity is adequate.
4. Explain why interest expense is growing.
5. If Groff€™s sales grow by 25 percent in 2012, what would you expect net income to be?
6. If Groff€™s assets must grow by 25 percent to support the 25 percent sales increase and if 50 percent of net income is paid in dividends, how much capital must Groff raise in 2012?

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Groff Graphics Company Consolidated Income Statements (In thousands) Year Ended December 31 $42,893 25,682 $35,526 Cost of goods sold Gross margin Other income, net 2 2 2 6 Costs and expenses Selling and administrative Income before income taxes Provision for income taxes 1,376 December 31 ASSETS Current assets: $ 245 Accounts receivable 3 $10,843 Total current assets Property, plant, and equipment Inet) Other assets Total assets 2 $12,501 Current liabilities 4,314 1,256 5,570 3,241 8,811 1,731 S 463 783 $ 1,246 3,266 4,512 Shortterm notes payable 987 2,718 3,234 5,952 Accounts payable Total current liabilities Long-term debt Total liabilities Common stock & additional paidhin 4,367 3,169 7,536 $16,347 4,598 1,951 6,549 12,501 S 4,725 1,255 S 5,980 $10,492 capi Retained earnings Total stockholders' equity Tolal liabilities and stockholders' equity