Which of the Following Is NOT a Likely Financing Policy

question 22

Multiple Choice

Which of the following is NOT a likely financing policy for a rapidly growing business?

• A) Adopt a modest dividend payout policy that enables the company to finance most of its growth externally.
• B) Borrow funds rather than limit growth,thereby limiting growth only as a last resort.
• C) Maintain a conservative leverage ratio to ensure continuous access to financial markets.
• D) If external financing is necessary,use debt to the point it does not affect financial flexibility.
• E) None of the above.

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Definitions:

Retained Earnings

The portion of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt.

Non-controlling Interest Share

The portion of equity interest in a subsidiary not owned by the parent company, reflecting the minority shareholders' stake in the consolidated entity.

Profit for the Period

The net income earned by a company over a specific period, reflecting the company's profitability.

Non-controlling Interest Proportion

The share of equity interest in a subsidiary not owned by the parent company, expressed as a percentage of total equity.