B. The inventory turnover ratio is Cost of Goods Sold ÷ Inventory. Under the current pro forma financial statements, Grow 'n' Glow's inventory turnover ratio is $72,820 ÷ $20,350, which equals 3.58 inventory turns per year. This is worse than the industry average of 4 turns per year. If the company increases its inventory turnover ratio to 4, inventory on the balance sheet would be $72,820 ÷ 4, or $18,205. The difference between $20,350 and $18,205 is $2,145.

At present, the company expects to need to increase its borrowing by $938 to support its increased sales.

However, if it can increase its inventory turnover to 4 times, thereby decreasing its inventory level to $18,205, it will free up $2,145 in cash. Instead of needing to borrow $938, the company will have $2,145 - $938, or $1,207 in cash available to either invest or to use to pay down loans.

C. This is the amount of cash that would be freed up if the company can increase its inventory turnover ratio to 4. However, it is not what the company's position would be with respect to additional funds needed or additional funds available.

D. This is the amount of additional funds needed minus the difference between the inventory level if the inventory turnover ratio were 4 and the inventory level the previous year (calculated as $20,350 ÷ 1.10).