In Which of the Following Situations Will Firm a Require

question 29

Multiple Choice

In which of the following situations will Firm A require greater amounts of external funding (additional funds needed, AFN) to meet its forecasted growth than Firm B? Assume the firms are identical in every other way. 

• A)Firm A operates at full capacity, whereas Firm B does not.
• B)Firm A uses the projected balance sheet method to forecast its pro forms financial statements, whereas Firm B does not.
• C)Firm A generates substantial amounts of spontaneously generated funds, whereas Frim B generates very little.
• D)Firm A has attained substantial economies of scale, whereas Firm B has not.
• E)Firm A operates close to its operating breakeven point, whereas Firm B operates well above its operating breakeven point.

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Definitions:

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