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Given the following information: Case 1 2 Cost of Goods Sold 60% of sales 70% of sales Selling, General, and Administrative Expense 20% of sales
Given the following information:
Case | 1 | 2 |
Cost of Goods Sold | 60% of sales | 70% of sales |
Selling, General, and Administrative Expense | 20% of sales | 12% of sales |
Net Profit | 5% of sales | 7% of sales |
Dividends | 40% of net profit | 20% of net profit |
Cash | 2% of sales | 3% of sales |
Accounts Receivable | 8% of sales | 6% of sales |
Inventory | 15% of C.O.G.S. | 10% of C.O.G.S. |
Accounts Payable | 7% of sales | 10% of sales |
Accrued Expenses | 4% of sales | 6% of sales |
In which case(s) would an increase in the sales growth rate increase external financing required?
- A.
1 only
- B.
2 only
- C.
1 and 2
- D.
neither 1 nor 2
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