On the Basis of Historical Relationships Between Its Balance Sheet

question 21

Multiple Choice

On the basis of historical relationships between its balance sheet items and its sales, profit margin, and dividend policy, Thode Corporation's analysts have graphed the relationship of additional funds needed (on the Y-axis) to possible growth rates in sales (on the X-axis) . If Thode decides to increase the percentage of earnings paid out as dividends, which of the following changes would occur in the graph?

• A) The line would shift to the right.
• B) The line would pass through the origin.
• C) The line would shift to the left.
• D) The slope coefficient would fall.
• E) The slope coefficient would increase.

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Definitions:

Multinational Corporations

Companies that operate in multiple countries beyond their original or home country, often engaging in production, sales, or other operations in various international locations.

Import/Export Businesses

Companies engaged in the trading of goods and services across international borders.

Encourage Exports

Policies or incentives designed to increase a country's goods sold abroad, aiming to improve economic balance.

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A system of money in general use in a particular country or economic system, facilitating the exchange of goods and services.