Which one of the following policies most directly affects the projection of the

Question

Which one of the following policies most directly affects the projection of the retained earnings balance to be used on a pro forma statement?

A.) net working capital policy

B.) capital structure policy

C.) dividend policy

D.) capital budgeting policy

E.) capacity utilization policy

What does the internal growth rate inform us?

A.) How much the firm can grow assets using retained earnings as the main source of financing

B.) Without having the access to capital markets, it shows how fast a firm can grow relying only upon internal financing

C.) Without having the access to capital markets, it shows how fast a firm can grow relying only upon external financing

D.) Externally generated funds will increase equity and assets while increasing debt

E.) Growth will be financed by both external debt and internally generated equity

A.) net working capital policy

B.) capital structure policy

C.) dividend policy

D.) capital budgeting policy

E.) capacity utilization policy

What does the internal growth rate inform us?

A.) How much the firm can grow assets using retained earnings as the main source of financing

B.) Without having the access to capital markets, it shows how fast a firm can grow relying only upon internal financing

C.) Without having the access to capital markets, it shows how fast a firm can grow relying only upon external financing

D.) Externally generated funds will increase equity and assets while increasing debt

E.) Growth will be financed by both external debt and internally generated equity

Explanation / Answer

1. The correct answer is A) Net working Capital Policy

It is the difference of the assets and liabilities of the organisation and affects the projection of retained earnings. Dividend is reduced from the opening retained earnings.

2. A.) How much the firm can grow assets using retained earnings as the main source of financing

Internal growth rate = Retained Earnings/ Assets

So it inform us how assets can be grown using retained earnings.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.