Which of the following would increase a firm's need for additional funds?
A)an increase in the profit margin
B)a decrease in the expected sales growth rate
C)a decrease in assets
D)an increase in the dividend payout rate

Question

Quizplus · Accepted Answer

Increasing the dividend payout rate would result in the firm distributing more of its profits to shareholders and therefore reducing the retained earnings that can be used for future investments. This would increase the need for additional funds to finance new projects or acquisitions. A, B, and C would not directly impact the need for additional funds.

Which of the Following Would Increase a Firm's Need for Additional