Hungry Kids 2012 Income Statement
Net sales	$	4,700
Cost of goods sold		3,300
Depreciation		685
Earnings before interest and taxes	$	715
Interest paid		170
Taxable Income	$	545
Taxes		202
Net income	$	343
Dividends	$	66
Addition to retained earnings	$	277

Hungry Kids 2012 Balance Sheet
	2012				2012
Cash	$	70		Accounts payable	$	1,380
Accounts rec.		470		Long-term debt		1,570
Inventory		960		Common stock	$	2,100
Total	$	1,500		Retained earnings		3,150
Net fixed assets		6,700
Total assets	$	8,200		Total liabilities & equity	$	8,200

Hungry Kids is currently operating at full capacity (Hint: Thus all assets are spontaneous). 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?

$69

$67

$68

$50

$49