If a Firm with a Positive Net Worth Is Operating

question 31

True/False

If a firm with a positive net worth is operating its fixed assets at full capacity, if its dividend payout ratio is 100%, and if it wants to hold all financial ratios constant, then for any positive growth rate in sales, it will require external financing.

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Definitions:

Insurance Company

A business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment, or hardship in exchange for premium payments.

Standard Deviation

An indicator of the spread or diversity within a dataset, showing to what extent the individual numbers deviate from the dataset's average.

Independent

Referring to variables in a statistical model that are not influenced by other variables in the model, suggesting no association between them.

Random Variable

A variable capturing the numerical consequences of randomness in events.