2009 Income Statement
Sales	$2,000
Variable Cost	$1,200
Fixed Cost	$700
Earnings before Interest and Taxes(EBIT)	$100
Interest	$16
Earnings before taxes	$84
Taxes	$33.60
Net Income	$50.40
Dividends	$15.12
Addition to Reatined Earnings	$35.28

2009 Balance Sheet
Cash and Securities	$20	Accounts Payable and Accruals	$100
Accounts Receivables	$240	Notes Payable	$100
Inventories	$240	Total Current Liabilities	$200
Total Current Assets	$500
		Long Term Debt	$100
Net Fixed Assets	$500	Common Stock	$500
		Retained Earnings	$200
Total Assets	$1,000	Total Liabilities and Equity	$1,000

2009 Key Ratios
	NWC	INDUSTRY
Profit Margin	2.52%	4%
Return on Equity	7.20%	15.60%
Days Sales Outstanding(360 Days)	43.20 days	32 days
Inventory Turnover	5.00X	8.00X
Fixed Assets Turnover	4.00X	5.00X
Total Assets Turnover	2.00X	2.50X
Total Debt Ratio	30%	36%
Times Interest Earned	6.25X	9.40x
Current ratio	2.50X	3.00x
Payout Ratio	30%	30%

1) Assume that NWC was operating at full capacity in 2009 with respect to all assets. Estimate the 2010 financial requirement using the projected financial statement approach (External financing needs). Assume that (1) each type of asset as well as payable, accruals, and fixed and variable costs grow at the same rate as sales; (2) the payout ratio and tax rate will be held constant.

2) Suppose you now learn that NWCs fixed assets were operated at only 75% of capacity. How would the existence of excess capacity in fixed assets affect the additional funds needed during 2010?