The Manning Company has financial statements as shown next, which are representative of the companys historical average.

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

The firm is expecting a 35 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.

Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds.

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Income Statement Sales Expenses Interest Eamings before taxes axeS Eamings after taxes Dividends S250,000 192.000 S 58,000 7,500 S 50,500 15.500 S 35,000 7,000 Balance Sheet Assets Liabilities and Stockholders' Equity Cash Accounts receivable.... Inventory S 8,500 Accounts payable 63,000 Accrued wages 91,000 Accrued taxes S162,500 Current liabilities 85000 Notes payable S 26,400 2,350 S 32,500 7,500 17,500 125,000 65.000 Current assets Fixed assets Long-term debt Common stock Retained earnings Total liabilities and Total assets 24700 stockholders' equity