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:

Firecrackers

Small explosive devices primarily used for entertainment purposes, especially in celebrations, that create a loud noise when detonated.

Fourth Of July

An American holiday celebrated on July 4th, commemorating the Declaration of Independence from Britain in 1776.

Unconditioned Stimulus

An innate trigger that automatically elicits a response, without any requirement for previous learning.

Classical Conditioning

A training method where a previously insignificant stimulus is linked with a significant one, gaining the ability to provoke comparable reactions.