USA: +1 (725) 712-1730 
Sign in
The Manning Company has financial statements as shown next, which are representative of the company’s historical average.
The firm is expecting a 30 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.
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.)
Income Statement $210,000 $ 45,300 $ 38,200 23,100 Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends $ 4,620 Balance Sheet Assets Liabilities and Stockholders’ Equity Cash Accounts receivable Inventory $ 7,500 Accounts payable 48,000 Accrued wages 81.000 Accrued taxes $ 136,500 Current liabilities 81,000 Notes payable $ 27,100 1,350 3,050 $ 31,500 7,100 15,500 121,000 Current assets Fixed assets Long-term debt Common stock Retained earnings Total liabilities and stockholders’ equity S 217,500 $ 217,500 Total assets
Expert Answer
