Company ABC would like to continue to grow, but in order to maintain control of all decisions and
ownership, it wants to avoid issuing new stock. Which calculation will show the company's leadership
the fastest that ABC can grow? - Sustainable growth rate
How can a company reduce its discretiona...
D076 Module 9 FLASHCARDS
Company ABC would like to continue to grow, but in order to maintain control of all decisions and
ownership, it wants to avoid issuing new stock. Which calculation will show the company's leadership
the fastest that ABC can grow? - ✔✔Sustainable growth rate
How can a company reduce its discretionary financing needed (DFN)? - ✔✔Increase the net margin.
How can a firm grow its fixed assets if it is expecting growth but has reached capacity with its fixed
assets? - ✔✔Invest a substantial amount of money at one time to increase capacity.
How does financial forecasting help with financial decision-making? - ✔✔It helps decision makers
understand the impacts of today's actions on the future performance of the firm.
If a company expects sales to grow by 10% next year, which account might also increase by 10%? - ✔✔
Cost of goods sold
What are spontaneous accounts? - ✔✔Accounts that vary naturally with sales
What does the discretionary financing needed (DFN) tell us? - ✔✔The total amount of funding that
management will need to obtain through discretionary financing sources
What does the sales capacity equation tell you? - ✔✔How much room a firm has to grow without
additional investment in fixed assets
What is discretionary financing needed (DFN)? - ✔✔The additional financing needed given a firm's
expected future growth
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