There are a number of different possible sources of capital, but:
A) the sale of stock or bonds is considered to be an internal source of capital.
B) debt financing is now illegal in the U.S.
C) they are all likely to have the same effect when it comes to the time horizon within which a marketing manager's plan is expected to be profitable.
D) a firm that is not yet profitable is likely to need to use external sources.
E) a firm isn't likely to be able to sell stock unless its marketing plan is a sure thing.

Question

Quizplus · Accepted Answer

External sources of capital, such as loans or investments from venture capitalists, are generally necessary for a firm that is not yet profitable to fund its operations and growth. Internal sources, such as retained earnings or the sale of stock or bonds, may not be sufficient if the company's revenue is not yet enough to cover its expenses. Therefore, D is the best choice as it aligns with this logic.

There Are a Number of Different Possible Sources of Capital