If total assets increase by the same percentage as sales increase the larger the increase in sales, the more likely there will be a need for external financing.

Question

Quizplus · Accepted Answer

When sales and total assets increase by the same percentage, if the sales increase is larger, it implies a larger absolute increase in assets. This may require more financing than the business can internally generate, leading to a potential need for external financing.

If Total Assets Increase by the Same Percentage as Sales