All other things constant, an increase in a firm's profit margin would
A)increase the additional funds needed for financing a growth in operations.
B)decrease the additional funds needed for financing a growth in operations.
C)have no effect on the additional funds needed for financing a growth in operations.
D)decrease its taxes.
E)none of the above.

Question

Quizplus · Accepted Answer

An increase in profit margin means that the firm is generating more profit per dollar of revenue. This means that the firm would need less additional funds for financing a growth in operations, as it can finance the growth from the increased profit.

All Other Things Constant, an Increase in a Firm's Profit