Which of the following will reduce the firm's financing requirements?
A)The firm operates at full capacity
B)The firm has excess capacity
C)The firm expects rapid growth in sales
D)The firm increases its dividend payout ratio

Question

Quizplus · Accepted Answer

If the firm has excess capacity, it means they can produce more with their current resources and don't need to acquire additional financing for expansion. The other options - operating at full capacity, expecting rapid growth in sales, and increasing dividend payout ratio - all increase financing requirements for the firm.

Which of the Following Will Reduce the Firm's Financing Requirements