Which of the Following Statements Is Most Correct

Multiple Choice

Which of the following statements is most correct?

A) If the capital intensity ratio is high, this permits sales to grow more rapidly without much outside capital.
B) The lower the profit margin, the lower the additional funds needed because less assets are needed to support existing sales.
C) When positive economies of scale are present, linear balance sheet relationships no longer hold. As sales increase, a proportionately greater stock of assets is required to support the higher sales level.
D) Technological considerations often require firms to add fixed assets in large, discrete units. Such assets are called lumpy assets and they affect the firm's financial requirements through the fixed assets/sales ratio at different sales levels.
E) The percentage of sales method accounts for changing balance sheet ratios and thus, cyclical changes in the actual sales/assets ratio do not have an impact on financing requirements.