The Lory Bookstore used internal financing as a source of long-term financing for 80% of its total needs in 2011. The company borrowed an additional 27% of its total needs in the long-term debt markets in 2011. What were Lory's net new stock issues in that year?
A) -20%
B) -7%
C) 7%
D) 20%
E) 27%

Question

Quizplus · Accepted Answer

The total financing needs are 100%. Internal financing covered 80%, and long-term debt covered 27%, totaling 107%. Therefore, net new stock issues were -7% to balance the total to 100%.

The Lory Bookstore Used Internal Financing as a Source of Long-Term