Suppose that a firm's profit margin is 5%,its debt/assets ratio is 56%,and its dividend payout ratio is 40%.If the firm is operating at less than full capacity,then sales could increase to some extent without the need for external funds; however,if it is operating at full capacity with respect to all assets,including fixed assets,then any positive growth in sales will require some external financing.

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The Answer of Suppose that a firm's profit margin is 5%,its debt/assets ratio is 56%,and its dividend payout ratio is 40%.If the firm is operating at less than full capacity,then sales could increase to some extent without the need for external funds; however,if it is operating at full capacity with respect to all assets,including fixed assets,then any positive growth in sales will require some external financing.

Suppose That a Firm's Profit Margin Is 5%,its Debt/assets Ratio