To determine the amount of discretionary funds needed, you would subtract the expected increase in liabilities from the sum of the expected increases in retained earnings and assets.

Accounts payable represent a spontaneous form of financing for a firm.

The process of planning future business actions and expressing those plans in a formal manner, usually in monetary terms, is called budgeting.

The budgeting process can be used to promote a positive effect on employees' attitudes, but it can also yield a negative one.

The task of preparing the budget normally is the responsibility of one department, the controller's department or a department of one of the high-level managers.

Most successful businesses generally prepare their budgets from 'the top down'. These budgets are tightly controlled by upper management.

At the sustainable rate of growth, the company does not need any additional assets to support the increased sales.

If there exist economies of scale in inventory investment, the percent of sales method is likely to overstate additional asset needs for a given increase in sales.

The presence of excess capacity increases the need for discretionary financing for any level of sales increase.

A firm’s sustainable rate of growth (g*) is determined by which of the following:

Which of the following would decrease the need for additional discretionary financing, everything else constant?