Which one of the following would increase a firm's need for additional funds?
A) an increasing profit margin
B) a decreasing expected sales growth rate
C) an increase in accruals
D) an increasing dividend payout rate
E) a decrease in assets

Question

Quizplus · Accepted Answer

An increasing dividend payout rate means the firm is distributing more of its earnings to shareholders, leaving less retained earnings to finance future growth, thus increasing the need for additional funds.

Which One of the Following Would Increase a Firm's Need