Business, 10.11.2020 05:20 alex24gonzales

The Manning Company has financial statements as shown next, which are representative of the company’s historical average. The firm is expecting a 35 percent 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 $ 290,000
Expenses 225,600
Earnings before interest and taxes $ 64,400
Interest 7,900
Earnings before taxes $ 56,500
Taxes 15,900
Earnings after taxes $ 40,600
Dividends $ 12,180

Balance Sheet
Assets Liabilities and Stockholders' Equity
Cash $ 7,000 Accounts payable $ 25,900
Accounts receivable 60,000 Accrued wages 1,650
Inventory 78,000 Accrued taxes 4,350
Current assets $ 145,000 Current liabilities $ 31,900
Fixed assets 89,000 Notes payable 7,900
Long-term debt 19,500
Common stock 129,000
Retained earnings 45,700
Total assets $ 234,000 Total liabilities and stockholders' equity $ 234,000

Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations.)

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The Manning Company has financial statements as shown next, which are representative of the company’...

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