As the firm expands, the spontaneous increase in which of the following is a source of finance? 1. equipment 2. accounts receivable 3. inventory 4. accounts payable

Over-estimation of the required level of assets will

1.	cause the firm to acquire excess finance
2.	reduce the firm's profitability
3.	increase the firm's equity

1.

1 and 2

2.

1 and 3

3.

2 and 3

4.

1, 2, and 3

The more a firm earns on additional sales, the less will be the need for external finance.

	1.	False
	2.	True