e Manning Company has financial statements as shown next, which are representative of the company's historical ave expecting a 35 percent increase in sales next year, and management is concerned about the company's need for exte e increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficie ization in the existing store. Among liabilities, only current liabilities vary directly with sales. Income Statement ales xpenses arnings before interest and taxes nterest arnings before taxes axec $ 260,000 206,000 $ 54,000 8,700 $ 45,300 16 700
e Manning Company has financial statements as shown next, which are representative of the company's historical ave expecting a 35 percent increase in sales next year, and management is concerned about the company's need for exte e increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficie ization in the existing store. Among liabilities, only current liabilities vary directly with sales. Income Statement ales xpenses arnings before interest and taxes nterest arnings before taxes axec $ 260,000 206,000 $ 54,000 8,700 $ 45,300 16 700
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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![Problem 4-28 (Algo) Percent-of-sales method [LO4-3]
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.
Sales
Expenses
Earnings before interest and taxes
Interest
Earnings before taxes
Taxes
Earnings after taxes
Dividends
Income Statement
Cash
Accounts receivable
Inventory
Current assets
Fixed assets
Total assets
The firm
Assets
has
$ 260,000
206,000
$ 54,000
8,700
$ 45,300
16,700
$ 28,600
$ 8,580
Balance Sheet (in $ millions)
$ 104,000
97,000
$5,000 Accounts payable
39,000 Accrued wages
60,000
Accrued taxes
Liabilities and Stockholders' Equity
$ 201,000
Using the percent-of-sales method, determine whether the co pany has external financing needs, or a surplus of funds. (Hint: A profit
margin and payout ratio must be found from the income statement.)
Note: Do not round intermediate calculations. Input your answer as positive a value.
Current liabilities
Notes payable.
Long-term debt
Common stock
Retained earnings
Total liabilities and stockholders' equity
in surplus funds.
$ 24,600
2,050
4,550
$ 31,200
8,700
23,500
121,000
16,600
$ 201,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4447dff3-bb38-43fb-bac3-59730fdafe57%2F18e4898b-e8f3-4979-9fe6-71a2322ff224%2Fg1gu6pf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 4-28 (Algo) Percent-of-sales method [LO4-3]
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.
Sales
Expenses
Earnings before interest and taxes
Interest
Earnings before taxes
Taxes
Earnings after taxes
Dividends
Income Statement
Cash
Accounts receivable
Inventory
Current assets
Fixed assets
Total assets
The firm
Assets
has
$ 260,000
206,000
$ 54,000
8,700
$ 45,300
16,700
$ 28,600
$ 8,580
Balance Sheet (in $ millions)
$ 104,000
97,000
$5,000 Accounts payable
39,000 Accrued wages
60,000
Accrued taxes
Liabilities and Stockholders' Equity
$ 201,000
Using the percent-of-sales method, determine whether the co pany has external financing needs, or a surplus of funds. (Hint: A profit
margin and payout ratio must be found from the income statement.)
Note: Do not round intermediate calculations. Input your answer as positive a value.
Current liabilities
Notes payable.
Long-term debt
Common stock
Retained earnings
Total liabilities and stockholders' equity
in surplus funds.
$ 24,600
2,050
4,550
$ 31,200
8,700
23,500
121,000
16,600
$ 201,000
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