The Manning Company has financial statements as shown next, which are representative of the companys historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the companys 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 Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends $220,000 158,000 $ 62,000 9,400 $ 52,600 17,400 $ 35,200 $ 8,800 Assets Cash Accounts receivable Inventory Current assets Fixed assets $ 5,000 61,000 77,000 $143,000 89,000 Balance Sheet Liabilities and Stockholders' Equity Accounts payable $ 25,700 Accrued wages 2,400 Accrued taxes 4,900 Current liabilities $ 33,000 Notes payable 9,400 Long-term debt 27,000 Common stock 128,000 Retained earnings 34,600 Total liabilities and stockholders' equity $ 232,000 Total assets $ 232,000 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