Bankston Corporation forecasts that if all of its existing financial policies are adhered to, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions would reduce its need to issue new common stock?
reducing the amount of short-term bank debt in order to increase the current ratio
increasing the percentage of debt in the target capital structure
increasing the proposed capital budget
increasing the dividend payout ratio for the upcoming year