Spontaneously Generated Funds Are Generally Defined as Follows

question 7

Multiple Choice

Spontaneously generated funds are generally defined as follows:

• A) Assets required per dollar of sales.
• B) A forecasting approach in which the forecasted percentage of sales for each item is held constant.
• C) Funds that a firm must raise externally through borrowing or by selling new common or preferred stock.
• D) Funds that arise out of normal business operations from its suppliers,employees,and the government,and they include spontaneous increases in accounts payable and accruals.
• E) 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.

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Definitions:

Capital Intensity Ratio

A measure of a company's investment in physical assets relative to its labor force, indicating the extent to which a firm's operations are automated or labor-intensive.

Operating Capacity

The maximum output that a business can produce in a given period under normal conditions, influenced by its resources and operational constraints.

Notes Payable

Short-term or long-term liabilities in the form of written promises to pay a specified amount with interest by a certain date.

Fixed Assets/Sales Ratio

A financial metric that indicates how efficiently a company is using its fixed assets to generate sales.