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.

---

Definitions:

Title Conveyance

The legal process of transferring ownership of property from one party to another.

Journal Entry

A record in accounting that logs a transaction and its impact on financial statements, consisting of a debit and a credit.

Trust Fund

A legal entity set up to hold assets such as cash, property, or investments for the benefit of a specific person, group, or organization.