Spontaneous debt financing results when accounts payable increase in proportion to a firm's profits.

Name: Spontaneous debt financing results when accounts payable increase in proportion to a firm's profits.
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Spontaneous debt financing occurs when a firm's accounts payable increase in proportion to its profits. This is because as a firm's profits increase, it will typically need to purchase more inventory and other supplies, which will lead to an increase in its accounts payable.

Spontaneous Debt Financing Results When Accounts Payable Increase in Proportion