Question

Suppose a firm calculates its external financing needed and finds that it is negative. what are the firm's options in this case?

Answer 1

One reason that causes firms to go out of business is the lack of external funding to support the growth of the firm. Understanding the implications of both the internal and sustainable growth rates can help management know when to limit firm growth such that the growth does not exceed the availability of the necessary financing to fund that growth.

Answer 2

I hope this helps you