Management wishes to reduce next year's external funding needs. Which of the following will accomplish this task?

Question

Quizplus · Accepted Answer

Decreasing the dividend payout ratio will reduce the amount of earnings that are paid out to shareholders as dividends, which can be used to finance the company's operations and reduce the need for external funding. Decreasing profit margins would lead to a decrease in earnings, which would increase the need for external funding. Increasing the assets/sales ratio would require the company to increase its assets or decrease its sales, which may not be feasible or desirable for the company. Option D is not a valid choice as there is at least one correct answer.

Management Wishes to Reduce Next Year's External Funding Needs