Edward, an employee of Akron Steels, Inc., is currently working on financial planning for the company. One morning he was having a discussion with his manager regarding the percentage of sales approach of financial planning. At one point of the discussion, his manager told him, “You should not increase notes payable, long-term debt and equity at the same rate you are increasing your sales because they depend on management decisions about the firm’s operating activities.”
A. His manager was right.
B. His manager was wrong about “Should not increase” part of the statement.
C. His manager was wrong about “they depend on management decisions about the operating activities” part of the statement.
D. His manager was wrong about both “Should not increase” and “they depend on management decisions about the operating activities” parts of the statement.