TABLE 3.5 Forecasting with a Spreadsheet: Pro Forma Financial Forecast for R&E Supplies, Incorporated, December 31, 2022 ($ thousands)
A	B	C	D
Year	2021 Actual	2022	2023
Net sales	$ 20,613
Growth rate in net sales		25.00%
Cost of goods soldet sales		86.0%
General, selling, and administrative expenseset sales		12.00%
Long-term debt	$ 760	$ 660
Current portion long-term debt	$ 100	$ 100
Interest rate		10.00%
Tax rate		25.00%
Dividend/earnings after tax		50.00%
Current assetset sales		29.00%
Net fixed assets		$ 280
Current liabilitieset sales		14.50%
Owners equity	$ 1,730
INCOME STATEMENT
Year	Equations	Forecast	Forecast
	2022	2022	2023
Net sales	= B3 + B3 * C4	$ 25,766
Cost of goods sold	= C5 * C19	22,159
Gross profit	= C19 C20	3,607
General, selling, and administrative expenses	= C6 * C19	3,092
Interest expense	= C9 * (C7 + C8 + C40)	228
Earnings before tax	= C21 C22 C23	287
Tax	= C10 * C24	72
Earnings after tax	= C24 C25	216
Dividends paid	= C11 * C26	108
Additions to retained earnings	= C26 C27	108
BALANCE SHEET
Current assets	= C12 * C19	7,472
Net fixed assets	= C13	280
Total assets	= C31 + C32	7,752
Current liabilities	= C14 * C19	3,736
Long-term debt	= C7	660
Owners equity	= B15 + C28	1,838
Total liabilities and owners equity	= C35 + C36 + C37	6,234
EXTERNAL FUNDING REQUIRED	= C33 C38	$ 1,518

TABLE 3.1 Financial Statements for R&E Supplies, Incorporated, December 31, 20182021 ($ thousands)
Income Statements
	2018	2019	2020	2021*
Net sales	$ 11,190	$ 13,764	$ 16,104	$ 20,613
Cost of goods sold	"9,400	"11,699	"13,688	"17,727
Gross profit	1,790	2,065	2,416	2,886
Expenses:
General, selling, and administrative expenses	1,198	1,431	1,795	2,408
Net interest expense	100	103	110	90
Earnings before tax	492	531	511	388
Tax	123	133	128	97
Earnings after tax	$ 369	$ 398	$ 383	$ 291
Balance Sheets
Assets
Current assets:
Cash and securities	$ 671	$ 551	$ 644	$ 412
Accounts receivable	1,343	1,789	2,094	2,886
Inventories	1,119	1,376	1,932	2,267
Prepaid expenses	14	12	15	18
Total current assets	3,147	3,728	4,685	5,583
Net fixed assets	"128	"124	"295	"287
Total assets	$ 3,275	$ 3,852	$ 4,980	$ 5,870
Liabilities and Owners Equity
Current liabilities:
Bank loan	$ 50	$ 50	$ 50	$ 50
Accounts payable	1,007	1,443	2,426	3,212
Current portion long-term debt	60	50	50	100
Accrued wages	5	7	10	18
Total current liabilities	1,122	1,550	2,536	3,380
Long-term debt	960	910	860	760
Common stock	150	150	150	150
Retained earnings	"1,043	"1,242	"1,434	"1,580
Total liabilities and owners equity	$ 3,275	$ 3,852	$ 4,980	$ 5,870

Table 3.1 presents R\&E Supplies' financial statements for the period 2018 through 2021 , and presents a pro forma financial forecast for 2022 . Use the information in these tables to answer the following questions. Calculate R\&E's sustainable growth rate in each year from 2019 through 2022. Assume the dividend payout ratio was the same in 2019 to 21 as forecasted in 2022. Note: Round each step and the final answer to 1 decimal place