The Manning Company has financial statements as shown next,which are representative of the company’s historical average. Thefirm is expecting a 30 percent increase in sales next year, andmanagement is concerned about the company’s need for externalfunds. The increase in sales is expected to be carried out withoutany expansion of fixed assets, but rather through more efficientasset utilization in the existing store. Among liabilities, onlycurrent liabilities vary directly with sales.

Income Statement
Sales	$	270,000
Expenses		217,400
Earnings beforeinterest and taxes	$	52,600
Interest		8,800
Earnings beforetaxes	$	43,800
Taxes		16,800
Earnings aftertaxes	$	27,000
Dividends	$	10,800

Balance Sheet
Assets			Liabilities and Stockholders' Equity
Cash	$	6,000	Accounts payable	$	28,400
Accountsreceivable		54,500	Accruedwages		2,100
Inventory		61,000	Accruedtaxes		4,600
Currentassets	$	121,500	Currentliabilities	$	35,100
Fixedassets		98,000	Notespayable		8,800
			Long-termdebt		24,000
			Commonstock		122,000
			Retainedearnings		29,600
Totalassets	$	219,500	Totalliabilities and stockholders' equity	$	219,500

Using the percent-of-sales method, determine whether the companyhas external financing needs, or a surplus of funds. (Hint: Aprofit margin and payout ratio must be found from the incomestatement.) (Do not round intermediate calculations.)