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External Financing Revenue

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Explain, whether additional financing is needed in cases "a" to "e".

Indicate whether each of the following would typically increase or decrease a firm's need for additional external financing:
a) An increase in cash dividends
b) An increase in the net profit margin
c) A decrease in the credit period offered by the firm's suppliers
d) A decrease in the credit period offered to the firm's customers
e) An increase in corporate income tax rates

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Solution Summary

External financing revenues are examined. The expert determines if a firm would increase or decrease a its need for additional external financing.

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ANSWERS

A. Increase. This transaction is requires a cash outflow
B. Decrease. An increase in net ...

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