Sunny Co. recently reported sales of P100 million, and net income of P10 million.  The firm has P80 million total assets. Next year, Sunny Co. is forecasting a 35% increase in sales. The firm also estimates that if sales increase by 35%, spontaneous liabilities will increase by P5 million. The dividend payout ratio is determined to be 30%.  If the sales increase, the profit margin will remain at its current level.  The company is at full capacity and assets must increase in direct proportion to sales.    1) How much is the increase in retained earnings? 2) using AFN, how much additional capital must the firm raise in order to support the forecasted percent increase in sales?

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