Considering each action independently and holding other things constant,which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)?
A)A decrease in the firm's accounts receivable average collection period
B)An increase in the firm's profit margin
C)A decrease in the firm's inventory turnover
D)A decrease in the expected growth rate in sales
E)A decrease in the firm's tax rate

Question

Quizplus · Accepted Answer

A decrease in the firm's inventory turnover means that the firm is holding onto inventory for a longer period of time, which ties up funds and increases the need for additional capital. The other choices would not directly impact the firm's need for additional capital.

Considering Each Action Independently and Holding Other Things Constant,which of the Following