In the Current Account,a Deficit in the Trade Balance Is

question 3

True/False

In the current account,a deficit in the trade balance is necessarily offset by a surplus in the service balance.

Understand the concept of the percentage of sales approach and its importance in financial planning.

Explain the assumptions underlying the sustainable growth rate and its implications for a firm's future.

Distinguish between the internal growth rate and the sustainable growth rate and their underlying assumptions.

Identify and evaluate a firm's options in response to a negative EFN (External Financing Needed).

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Definitions:

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.

Accounts Payable

Liabilities of a business that are due to be paid to creditors within a short period, usually one year.