The sustainable growth rate of a firm is best described as the _____ growth rate achievable...
The sustainable growth rate of a firm is best described as the _____ growth rate achievable _____.
A maximum; excluding external financing of any kind
B maximum; with unlimited debt financing
C minimum; assuming a 100 percent retention ratio
D minimum; if the firm maintains a constant equity multiplier
E maximum; excluding any external equity financing while maintaining a constant debt-equity ratio
Homework Answers
Correct answer is option E. maximum; excluding any external equity financing while maintaining a constant debt-equity ratio
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The sustainable growth rate of a firm is best described as the
_____ growth rate achievable...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue...
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has...
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio of 26 percent and a profit margin of 5 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? ο ο 74 times ο ο ο
A firm has a retention ratio of 30 percent and a sustainable growth rate of 6.70...
A firm has a retention ratio of 30 percent and a sustainable growth rate of 6.70 percent. The capital intensity ratio is 1.16 and the debt-equity ratio is .65. What is the profit margin?
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments...
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Bohemian Manufacturing Company: Bohemian Manufacturing Company has no debt in its capital structure and has $300,000,000 in assets. Its sales...
A firm wants a sustainable growth rate of 2.78 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 2.78 percent while maintaining a dividend payout ratio of 20 percent and a profit margin of 4 percent. The firm has a capital intensity ratio of 2. What is the debt–equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice .80 times .69 times .85 times .31 times .16 times
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio...
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio of 22 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice | o .80 times o 78 times o 60 times o 17 times o 20 times
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total...
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total asset turnover =3.20 Profit marge n =7,4% Equity multiplier 1.4 Payout ratio =60%
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total...
7. Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate Total asset turnover =3.20 Profit marge n =7,4% Equity multiplier 1.4 Payout ratio =60%
Problem 4-7 Calculating Sustainable Growth [LO3] The most recent financial statements for Schenkel Co. are shown...
Problem 4-7 Calculating Sustainable Growth [LO3] The most recent financial statements for Schenkel Co. are shown here: Income Statement Balance Sheet Sales $ 14,400 Current assets $ 11,700 Debt $ 16,200 Costs 9,600 Fixed assets 28,250 Equity 23,750 Taxable income $ 4,800 Total $ 39,950 Total $ 39,950 Taxes (40%) 1,920 Net income $ 2,880 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 20 percent dividend payout ratio. No external equity...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has...
A firm wants a sustainable growth rate of 3.08 percent while maintaining a dividend payout ratio of 26 percent and a profit margin of 5 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? ο ο 74 times ο ο ο
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Bohemian Manufacturing Company: Bohemian Manufacturing Company has no debt in its capital structure and has $300,000,000 in assets. Its sales...
A firm wants a sustainable growth rate of 2.88 percent while maintaining a dividend payout ratio of 22 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice | o .80 times o 78 times o 60 times o 17 times o 20 times
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