You are given data further below for the most recent fiscal year, 2007, for Henley Corporation and projections for 2008. Using this data, answer the following questions:

1. Using the percent of sales method, forecast the first pass of the pro-forma statements and the firms external financing needs for 2008 (ignore, how financing is raised, i.e., focus on the first pass) assuming payout ratio is 50%.
2. A firm's additional funds needed (AFN) must come from external sources. What are the typical external sources?

Income Statement for the year ending December 31 (Millions of Dollars)
	2007
Net sales	$800.0
Operating Costs (except depreciation)	576.0
Depreciation	60.0
Earnings before interest and taxes (EBIT)	$164.0
Less interest	32.0
Earnings before taxes	$132.0
Taxes (40%)	52.8
Net income available for common stockholders	$79.2
Number of shares (in millions)	10

Balance Sheet for December 31 (Millions of Dollars)
	2007			2007
Assets			Liabilities and Equity
Cash	$8.0		Accounts payable	$16.0
Marketable securities	20.0		Notes payable	40.0
Accounts receivable	80.0		Accruals	40.0
Inventories	160.0		Total current liabilities	$96.0
Total current assets	268.0		Long-term bonds	310.0
Net Property, Plant and equipment	600.0		Common Stock	202.0
			Retained Earnings	260.0
Total Assets	868.0		Total Liabilities and Equity	868.0

Further, the ratios and selected information for the current and 2008 (next fiscal year) are shown below.

	Actual	Projected
	2007	2008
Sales growth rate		11%
Operating Costs/Sales	72%	62%
Depreciation/Net PPE	10	10
Cash/Sales	1	1
Accounts Receivable/Sales	10	10
Inventories/Sales	20	20
Net PPE/Sales	75	75
Accounts payable/Sales	2	2
Accruals/Sales	5	5
Tax rate	40	40