Question :

Let's change our definition of Required External Financing (REF) by moving Dividends (Div) to the left-hand side of the equation (see REF powerpoint slides). If REF turns out to be negative which of the following actions could be used to help balance a pro-forma balance sheet? (Select all that applies)

A. Decrease Marketable Securities

B. Increase Marketable Securities

C. Decrease Dividends

D. Decrease Revolver

E. Increase Dividends

Derivation of Required External Financing (REF) [Rev+LTD+C/SMS]=C+A/R+lnv+OCA+NFA+OLTAA/POCLOLR/E REF=C+A/R+lnv+OCA+[GFADepr]+OLTAA/POCLOL[NIDiv] REF=[C+A/R+Inv+OCA+GFA+OLTA][A/P+OCL+OL][NI+DeprDiv] REF = Investment Spontaneous Financing - Internal Financing