Problem 4-29 Percent-of-sales method [LO3] Conn Man's Shops Inc., a national clothing chain, had sales of $340 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 35 percent. The balance sheet for the end of last year is shown next. End of Year in $ millions) Cash Assels Accounts receivable Liabilities and Stockholders' Equity $ 34 Accounts payable 64 30 59 68 17 29 Accrued expenses 75 Other payables Inventory Common stock Retained earnings Plant and equipment100 Total liabilities and shareholders' equity Total assets $ 238 $238 The firm's marketing staff has told the president that in the coming year there ill 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 extemal financing be required for the company during the coming year? No O Yes b. What would be the need for external financing if the net proft margin went up to 10.00 percent and the (e.g. dividend payout ratio was increased to 65 percent? (Enter your answer in dollars, not millions $1,234,567)) Required new funds Hints References eBook & Resources MacBook Air