Spontaneous Funds Are Generally Defined as Follows

question 2

Multiple Choice

Spontaneous funds are generally defined as follows:

• A) a forecasting approach in which the forecasted percentage of sales for each item is held constant.
• B) funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.
• C) funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.
• D) the amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth.
• E) assets required per dollar of sales.

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Definitions:

Outstanding Shares

The total number of shares of stock that are currently owned by investors, including restricted shares owned by the company’s officers and insiders.

Annual Dividend

The total dividend payment a company distributes to its shareholders annually, representing a share of the profits.

Required Rate

The lowest rate of return necessary for an investment to be acceptable to an investor, given its risk and alternatives available.

Stock Worth

The market value of a company's shares; it is determined by the price at which a share of stock is bought and sold in the market.