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 firm's 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 Operating Costs (except depreciation) Depreciation Earnings before interest and taxes (EBIT) Less interest Earnings before taxes Taxes (40%) Net income available for common stockholders Number of shares (in millions) $800.0 576.0 60.0 $164.0 32.0 $132.0 52.8 $79.2 2007 Balance Sheet for December 31 (Millions of Dollars) 2007 Assets Liabilities and Equity Cash $8.0 Accounts payable Marketable securities 20.0 Notes payable Accounts receivable 80.0 Accruals Inventories 160.0 Total current liabilities Total current assets 268.0 Long-term bonds Net Property, Plant and equipment 600.0 Common Stock Retained Earnings Total Assets 868.0 Total Liabilities and Equity $16.0 40.0 40.0 $96.0 310.0 202.0 260.0 868.0 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% 64% Depreciation/Net PPE Cash/Sales Accounts Receivable/Sales Inventories/Sales Net PPE/Sales Accounts payable/Sales Accruals/Sales Tax rate 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 firm's 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 Operating Costs (except depreciation) Depreciation Earnings before interest and taxes (EBIT) Less interest Earnings before taxes Taxes (40%) Net income available for common stockholders Number of shares (in millions) $800.0 576.0 60.0 $164.0 32.0 $132.0 52.8 $79.2 2007 Balance Sheet for December 31 (Millions of Dollars) 2007 Assets Liabilities and Equity Cash $8.0 Accounts payable Marketable securities 20.0 Notes payable Accounts receivable 80.0 Accruals Inventories 160.0 Total current liabilities Total current assets 268.0 Long-term bonds Net Property, Plant and equipment 600.0 Common Stock Retained Earnings Total Assets 868.0 Total Liabilities and Equity $16.0 40.0 40.0 $96.0 310.0 202.0 260.0 868.0 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% 64% Depreciation/Net PPE Cash/Sales Accounts Receivable/Sales Inventories/Sales Net PPE/Sales Accounts payable/Sales Accruals/Sales Tax rate