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 $ 220,000 Expenses 171,200 Earnings before interest and taxes $ 48,800 Interest 8,300 Earnings before taxes $ 40,500 Taxes 16,300 Earnings after taxes $ 24,200 Dividends $ 7,260 Balance Sheet Assets Liabilities and Stockholders' Equity Cash $ 8,000 Accounts payable $ 23,400 Accounts receivable 33,000 Accrued wages 1,850 Inventory 69,000 Accrued taxes 3,350 Current assets $ 110,000 Current liabilities $ 28,600 Fixed assets 93,000 Notes payable 8,300 Long-term debt 21,500 Common stock 117,000 Retained earnings 27,600 Total assets $ 203,000 Total liabilities and stockholders' equity $ 203,000 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.)
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 $ 220,000 Expenses 171,200 Earnings before interest and taxes $ 48,800 Interest 8,300 Earnings before taxes $ 40,500 Taxes 16,300 Earnings after taxes $ 24,200 Dividends $ 7,260 Balance Sheet Assets Liabilities and Stockholders' Equity Cash $ 8,000 Accounts payable $ 23,400 Accounts receivable 33,000 Accrued wages 1,850 Inventory 69,000 Accrued taxes 3,350 Current assets $ 110,000 Current liabilities $ 28,600 Fixed assets 93,000 Notes payable 8,300 Long-term debt 21,500 Common stock 117,000 Retained earnings 27,600 Total assets $ 203,000 Total liabilities and stockholders' equity $ 203,000 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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 | $ | 220,000 |
| Expenses | 171,200 | |
| Earnings before interest and taxes | $ | 48,800 |
| Interest | 8,300 | |
| Earnings before taxes | $ | 40,500 |
| Taxes | 16,300 | |
| Earnings after taxes | $ | 24,200 |
| Dividends | $ | 7,260 |
| Balance Sheet | |||||
| Assets | Liabilities and |
||||
| Cash | $ | 8,000 | Accounts payable | $ | 23,400 |
| Accounts receivable | 33,000 | Accrued wages | 1,850 | ||
| Inventory | 69,000 | Accrued taxes | 3,350 | ||
| Current assets | $ | 110,000 | Current liabilities | $ | 28,600 |
| Fixed assets | 93,000 | Notes payable | 8,300 | ||
| Long-term debt | 21,500 | ||||
| Common stock | 117,000 | ||||
| Retained earnings | 27,600 | ||||
| Total assets | $ | 203,000 | Total liabilities and stockholders' equity | $ | 203,000 |
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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