The Manning Company has financial statements as shown next, which are representative of the companys historical average. The firm is expecting a 25 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 $ 300,000 Expenses 231,000 Earnings before interest and taxes $ 69,000 Interest 8,000 Earnings before taxes $ 61,000 Taxes 16,000 Earnings after taxes $ 45,000 Dividends $ 13,500 Balance Sheet Assets Liabilities and Stockholders' Equity Cash $ 5,000 Accounts payable $ 29,900 Accounts receivable 81,000 Accrued wages 1,700 Inventory 79,000 Accrued taxes 4,400 Current assets $ 165,000 Current liabilities $ 36,000 Fixed assets 90,000 Notes payable 8,000 Long-term debt 20,000 Common stock 130,000 Retained earnings 61,000 Total assets $ 255,000 Total liabilities and stockholders' equity $ 255,000

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.) Next Visit question mapQuestion 11 of 19 Total11 of 19 Prev