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Determine whether the Manning Company has external financing needs.

The Manning Company has the following financial statements, which are representative of the company's historical average. (file is attached)

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 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.)


Solution Summary

This solution calculates the pro forma balance sheet and income statement for year two to determine financing needs.