Question 3 (External fund required) Conn Man's Shops Ltd had sales of Tshs 300 million last year. The business has a steady net profit margin of 8 percent and a dividend pay-out ratio of 25 percent. The balance sheet for the end of last year is shown below Assets Cash Accounts receivable Balance Sheet End of Year (in Tshs million) Liabilities and Stockholders' Equity 20 70 Accounts payable 20 25 Accrued expenses 75 Other payables 30 120 Common stock 40 Retained earnings 80 Total liabilities and Inventory Plant and equipment 240 240 Total assets The firm's marketing staff has told the Chief Executive that in the coming year there will be a large increase in the demand for the company's products. A sales increase of 15 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 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). a. Will external financing be required for the company during the coming year? b. What would be the need for external financing if the net profit margin went up to 9.5 percent and the dividend pay-out ratio was increased to 50 percent? Explain