A rapid rate of Growth in sales may require

A. sales forcasts to be made less frequently

B. higher dividend payments to shareholders

C. the firm to be more lenient with credit customers

D. increased borrowing by the firm to support the sales increase

Wouldn't the answer to this problem be B?

Not at all. Rapidly growing companies are traditinally less lielly to pay large dividends. They'd rather use their profits to fund expansion or acquisitions.

D. is probably the correct answer

To determine the answer to this question, we need to analyze the given options and choose the one that is most closely related to the rapid rate of growth in sales.

Option A suggests making sales forecasts less frequently. Sales forecasts are estimates of future sales based on historical data and market trends. However, a rapid rate of growth in sales indicates a surge in demand and revenue, which requires more frequent monitoring and forecasting to manage resources effectively. Therefore, Option A is unlikely to be the correct answer.

Option B proposes higher dividend payments to shareholders. Dividend payments are a distribution of profits to shareholders. While it is generally positive to reward shareholders, rapid sales growth does not necessarily mean higher dividends. Dividend payments are influenced by various factors, such as profitability, earnings, and management decisions. Therefore, Option B does not directly address the rapid rate of growth in sales and is unlikely to be the correct answer.

Option C suggests being more lenient with credit customers. While this may be a plausible consideration to accommodate the increased sales, it is not necessarily a requirement. Being more lenient with credit customers might increase sales, but it does not address the issues related to managing and supporting the growth effectively. Therefore, Option C may be a consideration but is not necessary for managing rapid sales growth.

Option D proposes increased borrowing by the firm to support the sales increase. This option is more closely related to managing rapid sales growth. A rapid increase in sales might require additional funding to meet the increased demand, expand production capacities, invest in marketing, hire more personnel, or address other operational needs. Borrowing can be a strategic approach to raising capital without diluting ownership or relying solely on company funds. Therefore, Option D is the most suitable answer to the given question.

Based on the analysis, the correct answer to the question is Option D: increased borrowing by the firm to support the sales increase.