The Manning Company has financial statements as shown next, which are representative of the company's historical...

  

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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 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 Sales Expenses Earnings before interest and taxes Interest. Earnings before taxes Taxes Earnings after taxes Dividends Cash Accounts receivable Inventory Current assets Fixed assets Total assets Assets The firm $ 230,000 175,300 $ 54,700 $ 8,400 46,300 16,400 $ 29,900 $ 11,960 Balance Sheet (in $ millions). $ 126,500 94,000 Liabilities and Stockholders' Equity $9,500 Accounts payable 47,000 Accrued wages 70,000 Accrued taxes, Current liabilities. Notes payable Long-term debt Common stock Retained earnings 220,500 Total liabilities and stockholders' equity $ 26,900 1,900 3,400 $ 32,200 8,400 22,000 110,000 39,900 $ 220,500 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.) Note: Do not round intermediate calculations. Input your answer as positive a value. 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 Sales Expenses Earnings before interest and taxes Interest. Earnings before taxes Taxes Earnings after taxes Dividends Cash Accounts receivable Inventory Current assets Fixed assets Total assets Assets The firm $ 230,000 175,300 $ 54,700 $ 8,400 46,300 16,400 $ 29,900 $ 11,960 Balance Sheet (in $ millions). $ 126,500 94,000 Liabilities and Stockholders' Equity $9,500 Accounts payable 47,000 Accrued wages 70,000 Accrued taxes, Current liabilities. Notes payable Long-term debt Common stock Retained earnings 220,500 Total liabilities and stockholders' equity $ 26,900 1,900 3,400 $ 32,200 8,400 22,000 110,000 39,900 $ 220,500 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.) Note: Do not round intermediate calculations. Input your answer as positive a value.

Answer rating: 100% (QA)

ANSWER In order to determine whether the company has external financing needs or a surplus of funds we need to calculate the additional funds required ... View the full answer