Question

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 Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends $290,000 225,600 $ 64,400 7.900 $ 56.500 15.900 $40.600 $ 12,180 25,900 Assets Cash Accounts receivable Inventory Current assets Fixed assets Balance Sheet Liabilities and Stockholders Equity $ 7.000 Accounts payable 60.000 Accrued wages 78,000 Acerued taxes $145,000 Current liabilities 89.000 Notes payable Long-ter debt Common stock Retained earnings $234,000 Total liabilities and stockholders' equity E22 Total assets 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.) The firm has fin surplus funds

Answer 1

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BOND - Microsoft Excel (Product Activation Failed) Home Insert Page Layout Formulas Data Review View Add-Ins %Cut E AutoSum - A Wrap Text Calibri 11 General ECopy Fill Sort & Find & Filter Select Merge & Center Insert Delete Format Paste B I U 000 Conditional Format Cell % Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fx FY610 Formula Bar FT FU FV FW FX FZ GA GB GC GD GE GF GG 594 595 manning 596 597 598 35% INCREASE income statement 599 year 1 year 2 sales 391500 600 290000 601 EXPENSES 225600 304560 602 EBIT 64400 86940 603 INTEREST 7900 7900 604 EBT 56500 79040 605 15900 22243.12 tax net income 40600 606 56796.88 17039.07 (FX607/FX606) * FY606] dividends 607 12180 addition to retained earnings 28420 608 39757.82 609 610 611 612 BIDDING, UNDERWRITING WARRANTrefund bond YIELD SPOT Sheet2 LP, IP, MRP, INFLATION YIELD Sheet EUAC AW PM LIFE BANKING NOTE CLEAN INVOICE PRICE AFN erences: J98 130% WA 13:43 ENG 09-10-2019 99

BOND- Microsoft Excel (Product Activation Failed) Formulas Home Insert Page Layout Data Review View Add-Ins %Cut E AutoSum - A Wrap Text Calibri 11 General ECopy Fill Merge & Center Insert Delete Format Paste B I U 00 00 Conditional Format Cell Sort & Find & Filter Select % Format Painter Clear Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fx FW611 FW FT FU FV FX FY FZ GA GB GC GD GE GF GG 611 612 35% increase 35% increase 613 BALANCE SHEET 614 year 2 year 1 year 1 year 2 cash accounts payable accrued wages 615 7000 9450.00 25900 34965.00 receivables 60000 616 81000.00 1650 2227.50 accured taxes inventory 78000 105300.00 617 4350 5872.50 Total current assets Total current liabilities 31900 618 145000 195750.00 43065.00 89000 89000.00 NO CHANGE notes payable 7900.00 NO CHANGE 619 FIXED ASSETS 7900 long term debt 19500 620 19500.00 NO CHANGE 621 common stock 129000 129000.00 NO CHANGE retained earnings 85457.82 [45700+39757.82] 622 45700 total liabilities & equity Total assets 623 234000 284750.00 234000 284922.82 624 625 IF WE SEE BALANCE SHEET, THE DIFFERENCE IS = 284750- 284922.82 = -172.82 626 THE FIRM HAS 172.82 SURPLUS FUNDS 627 628 629 Sheet2 Sheet YIELD SPOT EUAC AW PM LIFE WARRANTrefund bond BANKING NOTE CLEAN INVOICE PRICE AFN BIDDING, UNDERWRITING LP, IP, MRP, INFLATION YIELD ferences: GB185 Re 130% WA 13:47 ENG 09-10-2019