When using the percent-of-sales method in forecasting funds needed,which of the following is not true?
A) As the dividend payout ratio decreases,the required new funds also decrease.
B) Required new funds decrease as profits margins increase.
C) Required new funds increase as accumulated amortization increases.
D) As the tax rate increases,the required new funds increase.

Question

Quizplus · Accepted Answer

The percent-of-sales method assumes that the accumulated amortization remains constant as a percentage of sales. Therefore, an increase in accumulated amortization should not affect the required new funds. Choices A, B, and D are accurate statements.

When Using the Percent-Of-Sales Method in Forecasting Funds Needed,which of the Following