Discretionary Financing Needs Will Be Higher If ________

question 144

Multiple Choice

Discretionary financing needs will be higher if ________.Assume "all else equal."

• A) the firm's net profit margin increases
• B) sales decline
• C) the dividend payout ratio is raised
• D) excess capacity exists for fixed assets

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Definitions:

Statement of Cash Flows

It's a fiscal summary that tracks changes in balance sheet entries and the impact of income on cash and equivalents, sorting these modifications by operating, investing, and financing functions.

Indirect Method

A cash flow statement preparation method that adjusts net income for changes in non-cash accounts to calculate operating cash flow.

Operating Activities

Operating activities include the primary, day-to-day tasks and transactions related to running a business, which contribute to generating revenue.

Direct Method

A cash flow statement reporting approach that lists major operating cash receipts and payments during a period.