The Manning Company has financial statements as shown next, which are representatives of the company's historical average.
The firm is expecting a 40% 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.
Income Statement
Sales $280,000
Expenses 220,600
Earnings before interest and taxes $59,400
Interest 8,900
Earnings before taxes $50,500
Taxes 16,900
Earnings after taxes $33,600
Dividends $11,760
Balance Sheet
Assets Liabilities and Stockholders Equity
Cash $6000 Accounts payable $21,200
Accounts receivable 44,000 Accrued wages 2,150
Inventory 62,000 Accrued taxes 4,650
Current assets $112,000 Current liaiblities $28,000
Fixed assets 99,000 Notes payable 8,900
Long-term debt 24,500
Common stock 123,000
Retained earnings 26,600
Total assets $211,000 Total liabilities and Stockholders' equity $211,000
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. A profit margin and payout ratio must be found from the income statement. Do not intermediate calculations, input the amount as a positive value,