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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 30 percent increase
The Manning Company has financial statements as shown next, which are representative of the company's historical average The firm is expecting a 30 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 $290,000 240,800 $49,200 9,000 $40,200 17,000 Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes $ 23,200 Earnings after taxes Dividends $ 8,120 Balance Sheet Assets Liabilities and Stockholders' Equity Cash $ 25,000 2,200 4,700 $ 31,900 9,000 25,000 124,000 11.100 $ 8,000 45,000 63,000 $116,000 85,000 Accounts payable Accrued wages Accrued taxes unts receivable Inventory Current assets Fixed assets Current liabilities Notes payable Long-term debt Common stock Retained earnings S 201,000 $ 201,000 Total liabilities and stockholders' equity Total assets 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
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