A Firm with 30% Total Debt Ratio,total Assets of $10

question 62

Essay

A firm with 30% total debt ratio,total assets of $10 million,and an ROE of 14% has been paying out 60% of earnings to shareholders in the form of dividends.Sales are expected to increase by 10% this year,a faster growth rate than usual.Will external funding be required under these conditions? Will the debt-equity ratio remain constant?

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Definitions:

Cognitive Therapy

A form of psychotherapy aimed at changing maladaptive thinking patterns to improve emotional regulation and develop personal coping strategies.

Depressed People

Individuals who are experiencing a persistent feeling of sadness, hopelessness, and a lack of interest or pleasure in activities.

External Circumstances

Conditions or factors that occur outside of an individual and can affect one's decisions or actions.

Psychiatrist

A medical doctor specializing in the diagnosis, treatment, and prevention of mental health and emotional disorders, capable of prescribing medication.