Finance Homework. Pls Help

Posted on 2014-03-25 11:48:00 in Management by NIE

The Manning Company has financial statements as shown below, which are representative of the company’s historical average. The firm is expecting a 20 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase is sale 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.

Income Statement

Sales $200,000

Expenses 158,000

Earnings before interest and taxes $42,000

Interest 7,000

Earnings before taxes $35,000

Taxes $15,000

Earnings after taxes $20,000

Dividends $6,000



Balance Sheet

Assets

Cash $5,000

Accounts receivable 40,000

Inventory 75,000

Current assets $120,000

Fixed assets 80,000

Total assets 200,000



Liabilities and Stockholders’ Equity

Accounts payable 25,000

Accrued wages 1,000

Accrued taxes 2,000

Current liabilities 28,000

Notes payable 7,000

Long-term debt 15,000

Common Stock 120,000

Retained earnings 30,000

Total liabilities and stockholders’ equity 200,000

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