Correct Answer: The firm retained a higher percentage of earnings.
Explanation:
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More Budget And Planning MCQ Questions
A firm’s sustainable rate of growth (g*) is determined by which of the following:
The presence of excess capacity increases the need for discretionary financing for any level of sales increase.
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.
At the sustainable rate of growth, the company does not need any additional assets to support the increased sales.
Which of the following work to automatically reduce the need for discretionary financing as sales increase?
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.
The budgeting process can be used to promote a positive effect on employees' attitudes, but it can also yield a negative one.
The process of planning future business actions and expressing those plans in a formal manner, usually in monetary terms, is called budgeting.
Accounts payable represent a spontaneous form of financing for a firm.
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.