Hungry Kids 2012 Income Statement
Net sales	$	4,300
Cost of goods sold		2,950
Depreciation		665
Earnings before interest and taxes	$	685
Interest paid		150
Taxable Income	$	535
Taxes		194
Net income	$	341
Dividends	$	58
Addition to retained earnings	$	283

Hungry Kids 2012 Balance Sheet
	2012				2012
Cash	$	50		Accounts payable	$	960
Accounts rec.		430		Long-term debt		1,530
Inventory		920		Common stock	$	2,100
Total	$	1,400		Retained earnings		3,110
Net fixed assets		6,300
Total assets	$	7,700		Total liabilities & equity	$	7,700

Hungry Kids is currently operating at full capacity. The profit margin and the dividend payout ratio are held constant. Net working capital and fixed assets vary directly with sales. Sales are projected to increase by 5 percent. What is the external financing need?

$47

$39

$40

$48

$49