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The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Income Statement Sales Expenses $250,000 192,000 $ 58,000 Earnings before interest and taxes Interest Earnings before taxes 7,500 $50,500 15,500 Taxes Earnings after taxes $ 35,000 Dividends $ 7,000 Balance Sheet Assets Liabilities and Stockholders' Equity Cash $ 8,500 Accounts payable Accounts receivable Accrued wages Inventory Accrued taxes 63,000 91,000 $162,500 85,000 Current assets Current liabilities Fixed assets Notes payable Long-term debt Common stock Retained earnings $247,500 Total assets Total liabilities and stockholders' equity $ 26,400 2,350 3,750 $ 32,500 7,500 17,500 125,000 65,000 $247,500 Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations.) The firm