When a company is experiencing rapid growth, which of the following statements is the most correct?
A)Cash flow from operations will be greater than cash flow from investing.
B)The company will likely need more outside financing than if growth was slower.
C)Cash flow from operations will be high due to rapid growth allowing company to pay down debt.
D)Rapid growth will increase internally generated funds allowing higher dividend payments in periods of rapid growth.

Question

Quizplus · Accepted Answer

Rapid growth often requires more investment in things like infrastructure, inventory, marketing and advertising, etc. This means that the company will likely need more outside financing to fuel that growth, whether through loans or equity investment. While cash flow from operations may be higher, it's unlikely to be enough to completely fund the growth.

When a Company Is Experiencing Rapid Growth, Which of the Following