Question
Suppose a firm makes the following policy changes. If the change means that external non- spontaneous financial requirements (AFN) will increase, indicate this with a
Suppose a firm makes the following policy changes. If the change means that external non- spontaneous financial requirements (AFN) will increase, indicate this with a (+); indicate a decrease with a(-); and indicate an indeterminate or negligible effect with a (0). Think in terms of the immediate short-run effect on funds requirements. a. The dividend payout ratio is increased. b. Rather than produce computers in advance, a computer company decides to produce them only after an order has been received. c. The firm decides to pay all suppliers on delivery, rather than after a 30-day delay, to take advantage of discounts for rapid payment. d. The firm begins to sell on credit. (Previously, all sales had been on a cash basis.) e. The firm's profit margin is eroded by increased competition; sales are sheady Advertising expenditures are stepped up. g. A decision is made to substitute long-term mortgage bonds for short-term bank loans. h. The firm begins to pay employees on a weekly basis. (Previously, it had paid employees at the end of each month.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started