In the percent-of-sales method,a decrease in dividends:
A) will increase required new funds.
B) will decrease required new funds.
C) has no effect on required new funds.
D) more information is needed.

Question

Quizplus · Accepted Answer

The percent-of-sales method assumes a constant dividend payout ratio. Therefore, a decrease in dividends will decrease the amount of funds required to finance future growth.

In the Percent-Of-Sales Method,a Decrease in Dividends