Spontaneous Funds Are Generally Defined as Follows

question 16

Multiple Choice

Spontaneous funds are generally defined as follows:

• A) A forecasting approach in which the forecasted percentage of sales for each item is held constant.
• B) Funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.
• C) Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.
• D) The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth.
• E) Assets required per dollar of sales.

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Definitions:

Dividend Payout Rate

A measure of the percentage of earnings a company pays to its shareholders in the form of dividends.

High Dividend

Refers to stocks or securities that pay out significant portions of profit in the form of dividends compared to their stock price.

High Dividend Payout

A scenario where a company distributes a large portion of its earnings to its shareholders in the form of dividends.