Table shows the December 31, 2012, pro forma balance sheet and income statements for R&E Supplies, Inc. The pro forma balance sheet shows that R&E Supplies will need external funding from the bank of $1.4 million. However, they show almost $1.3 million in cash and short-term securities. Why are they talking to the bank for such a large amount when they have most of this sum in their cash account?

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Income Statement Net sales Cost of goods sold Gross profit 2012 $25,766 22,159 3,607 Comment:s 25% increase 86% of sales 12% sales Initially constant General, selling, and administrative expenses Net interest expense 90 425 191 S 234 Earnings before tax Tax 45% tax rate Earnings after tax Balance Sheet Current assets: Cash and securities Accounts receivable Inventories Prepaid expenses $ 1,271 3,600 2,462 20 7,353 280 7,633 18 days sales 51-day collection period 9 times turnover Rough estimate Total current assets Net fixed assets Total assets Liabilities and Owners Equity Current liabilities: See text discussion Bank loan Accounts payable 3,582 100 59-day payables period See text discussion Rough estimate Current portion of long-term debt Accrued wages Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and owners' equity 3,704 660 150 1,697 $ 6,211 See text discussion External funding required S 1,422