Suppose a Firm Forecasts Sales Growth Larger Than Its Sustainable

question 63

Multiple Choice

Suppose a firm forecasts sales growth larger than its sustainable growth rate,but plans to add fewer assets than the current asset to sales ratio implies.If other aspects of the firm's performance remain constant,the pro forma external funds required (EFR)

• A) will likely be larger than the sustainable growth rate implies.
• B) will likely be smaller than the sustainable growth rate implies.
• C) will likely be the same as the sustainable growth rate implies.
• D) cannot be determined from this information.

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Definitions:

Error Variance

Error variance refers to the portion of variability in a set of data that results from factors other than the independent variable, often attributed to random or uncontrolled variables.

Shyness

A temperament or personality condition characterized by a feeling of unease or inhibition in social situations, possibly leading to avoidance.

Measurement Principle

The fundamental concept that any phenomenon to be studied must have a corresponding method of measurement to be scientifically investigated.

Aggregation

The combining together of different measurements, such as by averaging them.