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The faster a firm's growth in sales, the more likely it is that an increasing percentage of...

Question:

The faster a firm's growth in sales, the more likely it is that an increasing percentage of financing will be internally generated. True or false?

Sales:

The services and commodities which any organization sells for a specific value in a specific period of time are known as "sales". The objective of this transaction is to reach the target audience and earn a profit.

Answer and Explanation:

True

Financing refers to the process of managing money. It comprises of operations like saving, allocating, depositing, borrowing, and estimating.

The increase in sales growth leads to increased revenue generation. If the organization is continuously increasing its sales growth, management can easily use the profits for future expenses like purchasing raw material, additional equipment and labor costs.

Therefore, the organization will not need any external financing; the profit earned can be utilized for the same.


Learn more about this topic:

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What Is Financing? - Definition & Types

from Corporate Finance: Help & Review

Chapter 8 / Lesson 7
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