The Manning Company has financial statements as shown next, which are representative of the companys historical average. The firm is expecting a 40 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 StatementSales$280,000Expenses220,600Earnings before interest and taxes$59,400Interest8,900Earnings before taxes$50,500Taxes16,900Earnings after taxes$33,600Dividends$11,760

Balance SheetAssetsLiabilities and Stockholders' EquityCash$6,000Accounts payable$21,200Accounts receivable44,000Accrued wages2,150Inventory62,000Accrued taxes4,650Current assets$112,000Current liabilities$28,000Fixed assets99,000Notes payable8,900Long-term debt24,500Common stock123,000Retained earnings26,600Total assets$211,000Total liabilities and stockholders' equity$211,000

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.)