Refer to the exhibit.

If profit margin decreases, the organization generates less internal financing from each dollar of sales. Assuming all else remains equal, more external financing will be needed to support the same level of growth. Therefore, the “Funds Needed” line remains upward sloping but becomes steeper because financing requirements rise more quickly as sales increase. Option A is incorrect because a lower profit margin does not reduce the need for funds. Options C and D are wrong because the line should not point downward; growth normally requires more assets and therefore more financing unless internally generated funds fully cover requirements. Internal auditors reviewing financial planning should understand how profitability, asset intensity, dividend policy, and growth assumptions affect financing needs. Therefore, Option B is correct.