A rapid rate of growth in sales may require
A) higher dividend payments to shareholders.
B) increased borrowing by the firm to support the sales increase.
C) the firm to be more lenient with credit customers.
D) sales forecasts to be made less frequently.

Question

Quizplus · Accepted Answer

A rapid rate of growth in sales may require increased borrowing by the firm to support the sales increase. This is because higher demand for goods may require the firm to increase production, hire more employees, and invest in new equipment or inventory. To finance these investments, the firm may need to borrow money from lenders or issue new debt. Higher dividend payments or being more lenient with credit customers are not necessarily related to a rapid growth in sales. Sales forecasts should actually be made more frequently during a period of rapid growth to ensure the firm can keep up with demand.

A Rapid Rate of Growth in Sales May Require