If Your fiRm Is Currently Operating at Full Capacity and You

question 340

Multiple Choice

If your firm is currently operating at full capacity and you expect strong sales growth over the next few years, you should most likely:

• A) Expect that assets will not grow.
• B) Raise your dividend payout to accommodate the growth.
• C) Put off any further financial planning until sales growth moderates.
• D) Expect external financing will be needed.
• E) Expect the growth in retained earnings to outpace the growth in sales.

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Definitions:

High Tax Rate

The proportion of income or revenue taken by the government through taxes is considered to be above average or burdensome.

Decimal System

A numerical system based on 10, particularly used in mathematics and denoting numbers using a point to separate the integer part from the fractional part.

Major Sections

The primary divisions of a document, presentation, or work of writing, organized to enhance clarity and structure.

Arabic Numbers

Arabic numbers are the ten digits (0, 1, 2, 3, 4, 5, 6, 7, 8, 9) used around the world today for denoting quantities.