Task 2 - Growth Rates, Pro Formas, and EFN The Microsoft (NASDAQ: MSFT) board of directors have hired you as their new CFO. Your first task is to is to determine what kind of growth the company can support in 2022 and then project sales going forward to determine the financing needed. Financial Statements Microsoft Corp. 2021 Income Statement (in millions of $) Other Inputs Sales 10,596.0 Tax rate 19% COGS 5,923.0 Growth rate 20% Other expenses 788.0 Depreciation 1,002.0 EBITDA 2,883.0 Interest 900.0 Taxable income 1,983.0 Taxes (19%) 376.8 Net income 1,606.2 Dividends 700.0 Add to RE 906.2 Microsoft Corp. 2021 Balance Sheet (in millions of $) Assets Liabilities & Equity Current Assets Current Liabilities Cash 250.0 Accounts Payable 459.0 Accounts rec. 332.0 Notes Payable 780.0 Inventory 198.0 Total CL 1,239.0 Total CA 780.0 Long-term debt 6,333.0 Shareholder Equity Fixed assets Common stock 3,000.0 Net PP& E 10,883.0 Retained earnings 1,091.0 Total Equity 4,091.0 Total Assets 11,663.0 Total L& E 11,663.0Calculation & Output Question 1 - Using the financial statements above, calculate the following ratios and use them to determine Microsoft's Internal and Sustainable Growth Rates. (15 points) Return on assets Return on equity Dividend payout ratio Retention ratio Internal growth rate Sustainable growth rate Question 2 - By what percentage can Microsoft grow in 2022 without having to access external capital markets for debt or equity? (5 points) Answer: Question 3 - Sales for 2022 are projected to grow by 20%. Interest expense and depreciation expense will remain constant (keep the same value as the previous year). The tax rate and the dividend payout ratio will also remain the same. Costs, other expenses, current assets, fixed assets, and accounts payable increase with sales. If no new debt or equity is issued, what is the external financing needed (EFN) for Microsoft to support its 20 percent sales growth? (25 points) Microsoft Corp. Pro Forma 2022 Income Statement Sales Sales growth rate 20% COGS Other expenses Depreciation EBIT Interest Taxable income Taxes (19%) Net income Dividends Add to RECurrent Assets Cash Accounts rec. Inventory Total CA Fixed assets Net PP&E Total Assets EFN Assets Microsoft Corp. Pro Forma 2022 Balance Sheet Current Liabilities Accounts Payable Notes Payable Total CL Long-term debt Shareholder Equity Common stock Retained earnings Total Equity Total L&E Liabilities & Equity