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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 3 0

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 $ 200,000
Expenses 149,600
Earnings before interest and taxes $ 50,400
Interest 9,200
Earnings before taxes $ 41,200
Taxes 17,200
Earnings after taxes $ 24,000
Dividends $ 6,000
Balance Sheet
Assets Liabilities and Stockholders' Equity
Cash $ 6,000 Accounts payable $ 22,900
Accounts receivable 55,000 Accrued wages 2,300
Inventory 69,000 Accrued taxes 4,800
Current assets $ 130,000 Current liabilities $ 30,000
Fixed assets 87,000 Notes payable 9,200
Long-term debt 26,000
Common stock 126,000
Retained earnings 25,800
Total assets $ 217,000 Total liabilities and stockholders' equity $ 217,000
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.)

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