A firm's external financing need is financed by which of the following?
A)retained earnings
B)net working capital and retained earnings
C)net income and retained earnings
D)debt or equity
E)owners' equity, including retained earnings

Question

Quizplus · Accepted Answer

External financing needs refer to the capital required by a firm that cannot be met through its internal sources such as retained earnings or net working capital. Hence, such needs are typically catered to through external financing sources like debt (borrowing) or equity (issuing securities). As a result, option D is the most appropriate choice as it includes the external financing options of debt or equity.

A Firm's External Financing Need Is Financed by Which of the Following