Hughes Corporation had the balance sheet shown in Table 5F at the end of last year. The company had net income of $750,000 on sales of $10,000,000, and paid $250,000 in dividends last year. Hughes is at full capacity and considers all its assets, accounts payable, and accrued payables as spontaneous. Assume the net profit margin and dividend payout ratio remain the same this year, and that sales are projected to be $12,000,000.

Reference: Ref 5-2

Using the percentage-of-sales method, what is the forecasted end-of-this-year external financing need (EFN) or excess cash (in thousands of dollars)?

Excess cash of $30.

Excess cash of $70.

EFN of $20

EFN of $40.