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:

Discount Periods

Time frames during which a payer can make payment less than the nominal amount due before a specified due date to receive a discount.

Discount Rate

The interest rate charged by central banks for loans to commercial banks or the rate used in discounted cash flow analysis to determine the present value of future cash flows.

Present Value

The present worth of a future amount of money or series of cash flows, considering a certain rate of return.

Rate Of Return

A measure of the gain or loss on an investment over a specified period, expressed as a percentage of the investment’s initial cost.