A Company Calculates Its Discretionary Financing Needed and Determines This

question 59

Multiple Choice

A company calculates its discretionary financing needed and determines this amount of capital cannot be raised at a reasonable cost.Which of the following would reduce the amount of discretionary financing needed?

• A) reduce the company's net profit margin
• B) reduce the company's sales growth rate
• C) increase the company's dividend payout ratio
• D) increase the proportion of the company's sales that are made on credit

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Definitions:

FICA-OASDI

The Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance, a payroll tax funding Social Security and Medicare in the U.S.

FICA-Medicare

The portion of the Federal Insurance Contributions Act tax that is designated to fund Medicare, the health insurance program for the elderly and certain disabled individuals.

Odd Years

Years that are not evenly divisible by two, indicating an odd number as the final digit.

W-3

A tax form used in the United States that summarizes the total wages paid and taxes withheld for all employees of a company.