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 Statement
Sales	$	270,000
Expenses		203,400
Earnings before interest and taxes	$	66,600
Interest		7,700
Earnings before taxes	$	58,900
Taxes		15,700
Earnings after taxes	$	43,200
Dividends	$	17,280

Balance Sheet
Assets			Liabilities and Stockholders' Equity
Cash	$	7,500	Accounts payable	$	29,000
Accounts receivable		71,000	Accrued wages		1,850
Inventory		70,000	Accrued taxes		4,250
Current assets	$	148,500	Current liabilities	$	35,100
Fixed assets		87,000	Notes payable		7,700
			Long-term debt		18,500
			Common stock		127,000
			Retained earnings		47,200
Total assets	$	235,500	Total liabilities and stockholders' equity	$	235,500

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.)