Balance sheet Assets Cash Receivables Inventory Property, plant and equipment Total assets Liabilities Payables Shortterm debt (10 % interest)

Refer to the following financial statements and answer the questions:

Answer the following questions:

1. Determine which items varied in constant proportion to sales between 20x6 and 20x7.
2. Determine the rate of growth in sales that was achieved from year 20x6 to 20x7.
3. What was the firm's return on equity for 20x7? Can you calculate for 20x6?
4. What was the firm's external (additional) funding requirement determined to be for 20x? How was the funding obtained? (hint: compare the changes in debts and equities).

• Attachment 1
• Attachment 2

Balance sheet Assets CashReceivablesInventory Property, plant and equipment Total assetsLiabilities Payables Short—term debt (10 % interest)Long—term debt (7% interest) Sh areholders' equity Common stockRetained earningsTotal liabilities and equity 20x6 $300,000 $200,000 $700,000$1,800,000$3,000,000 $300,000$500,000$800,000 $1,100,000$300,000$3,000,000 20x7 $375,000 $250,000 $875,000$2,250,000$3,750,000 $375,000$989,882$900,000 $1,100,000$385,118$3,750,000