Based on the income statement and balance sheet below for S & S Air, prepare financial statements for the next year so that the company can begin to address any outside investment requirements.

a. Calculate the internal growth rate and sustainable growth rate for S & S Air. Use 2011 Data.

b. S & S Air is planning for a growth rate of 12% next year. Calculate the EFN for the company, assuming the company is operating at full capacity. Further assume that costs and other expenses vary with sales, as do the current assets, fixed assets, and accounts payable. All else remains constant. Can the companys sales increase at this growth rate?

c. Most assets can be increased as a percentage of sales. However, fixed assets must be increased in specific amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case, a company has a lumpy fixed cost structure. Assume S & S Air is currently producing at 100% capacity. As a result, to increase production, the company must set up an entirely new line at a cost of $5,000,000. Calculate the new EFN with this new assumption.

Can you help me through this one? Especially part (2) and (3)?

S&S AIR 2011 Income Statement Sales Costs Other Expenses Depreciation EBIT Interest Paid $ Taxable Income $ Taxes $ Net Income $ Dividends $ Addition to Retained Earnings $ | 36,599,300 26,669,496 4,641,000 1,640,200 3,648,604 573,200 3,075,404 1,230,162 1,845,242 560,000 1,285,242 S & S AIR 2011 Balance Sheet Current Assets Current Liabilities Cash $ 396,900 A/P A/R $ 637,560 N/P Inventory $ 933,400 Total Total $ 1,967,860 Long Term Debt Total Debt Fixed Assets Owners' Equity Net Plant & Equipment $ 15,411,620 Common RE Total Equity $ 844,550 $ 1,928,500 $ 2,773,050 $ 5,050,000 $ 7,823,050 $ 322,500 $ 9,233,930 $ 9,556,430 Total Assets $ 15,411,620 Total Liab & Equity $17,379,480