Normal Capacity and Budgeted Capacity Are Demand-Based Capacity Measurements

question 89

True/False

Normal capacity and budgeted capacity are demand-based capacity measurements.

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Definitions:

External Financing Needed

The additional funding a firm requires to finance its spending plans, such as investments in fixed assets or increases in working capital, beyond what can be funded by internal sources.

Dividend Payout Ratio

A metric indicating the proportion of a company's net profits paid out to its shareholders as dividends.

Profit Margin

A financial performance ratio that shows the percentage of profit a company produces from its total revenue.

Net Working Capital

The contrast between a firm's assets available in the short term and the liabilities due in the same period, pointing to its immediate financial condition.