Problem 4-27 Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. $ 16 4 Assets Cash Accounts receivable Inventory Current assets Fixed assets Balance Sheet (in $ millions) Liabilities and Stockholders' Equity $ 2 Accounts payable 22 Accrued wages 24 Accrued taxes $ 48 Current liabilities 43 Notes payable Common stock Retained earnings $ 91 Total liabilities and stockholders' equity 10 $ 30 12 12 17 32 $ 91 Total assets Owen's Electronics has an aftertax profit margin of 6 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).) New funds Conn Man's Shops, a national clothing chain, had sales of $310 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 30 percent. The balance sheet for the end of last year is shown. Assets Cash Accounts receivable Inventory Plant and equipment Balance Sheet End of Year (in $ millions) Liabilities and Stockholders' Equity $ 31 Accounts payable 26 Accrued expenses 72 Other payables 119 Common stock Retained earnings $ 248 Total liabilities and stockholders' equity $ 62 39 54 62 31 $ 248 Total assets The firm's marketing staff has told the president that in the coming year there will be a large increase in the demand for overcoats and wool slacks. A sales increase of 20 percent is forecast for the company. All balance sheet items are expected to maintain the same percent-of-sales relationships as last year,* except for common stock and retained earnings. No change is scheduled in the number of common stock shares outstanding, and retained earnings will change as dictated by the profits and dividend policy of the firm. (Remember, the net profit margin is 8 percent.) *This includes fixed assets, since the firm is at full capacity. a. Will external financing be required for the company during the coming year? O No O Yes b. What would be the need for external financing if the net profit margin went up to 9.00 percent and the dividend payout ratio was increased to 50 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g., $1,234,567).) Required new funds