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12-1Caters Corporation’s sales are expected to increase from $5 million in 2005 to $6millionin 2006, or by 20percent. Its assets totaled $3million at te end of 2005. Carter is at f!llcapacity, so its assets m!st "ro# at te same rate as proected sales. %t te end of 2005,c!rrent liabilities #ere $1 million, consistin" of $250,000 of acco!nts payable, $5000,000

of notes payable, and $250,000 of accr!als. &e after tax profit mar"in is forecasted to be5 percent, and te forecasted payo!t ration is '0 percent.

(se te %)* form!la to forecast Carter’s additional f!nds needed for te comin" year.

%dditional + e!ired pontaneo!s Increase in)!nds + Increase - increase in - retained *eeded + in assets /iabilities earnin"s%)* + %o 4 - /o 4 - 1