Which of the Following Statement Is Correct If a Firm

question 137

Multiple Choice

Which of the following statement is correct if a firm believes its costs and assets grow at the same rate as sales, the dividend payout ratio is fixed, no new equity is possible, and the current debt-equity ratio is optimal?

• A) The sustainable growth rate gives the maximum rate at which sales can grow.
• B) External financing will be zero.
• C) Asset growth must completely come from increases in accounts payable and retained earnings.
• D) If the firm pays out in dividends all of its net income, sales will grow.
• E) If the firm pays out its current ratio, its sales cannot grown.