Harvard Prep Shops, a national clothing chain, had sales of $350 million last year. The business has a steady net profit margin of 20 percent and a dividend payout ratio of 40 percent. The balance sheet for the end of last year is shown below: Assets Cash Account receivable Inventory Balance Sheet December 31, 20xx (5 millions) Liabilities and Shareholders' Equity $6 Accounts payable 18 Accrued expenses 63 Other payables Common stock 200 Retained earnings $287 Total liabilities and equity $30 13 20 80 144 Plant and equipment Total assets $287 Harvard's anticipates a large increase in the demand for tweed sport coats and deck shoes. A sales increase of 20 percent is forecast. All balance sheet items are expected to maintain the same percent-of-sales relationships as last year, except for common stock and retained earnings. No change in the number of common shares outstanding is scheduled, and retained earnings will change as dictated by the profits and dividend policy of the firm, a. Will external financing be required for the Prep Shop during the coming year? Yes No Inventory 63 CH Plant and equipment Uther payables Common stock Retained earnings 200 20 Be 144 Total assets $287 Total liabilities and equity $287 Harvard's anticipates a large increase in the demand for tweed sport coats and deck shoes. A sales increase of 20 percent is forecast All balance sheet items are expected to maintain the same percent of sales relationships as last year, except for common stock and retained earnings. No change in the number of common shares outstanding is scheduled, and retained earnings will change as dictated by the profits and dividend policy of the firm, a. Will external financing be required for the Prep Shop during the coming year? Yes O No b. What would the need for external financing be if the net profit margin went up to 25 percent and the dividend payout ratio was increased to 75 percent? (Enter the answer in millions. Round the final answer to 2 decimal places.) million Required new funds Prev 1 of 1 !! Next