Which of the Following Statements Is CORRECT

question 31

Multiple Choice

Which of the following statements is CORRECT?

• A) The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds.In other words,it is the growth rate at which the firm's AFN equals zero.
• B) If a firm's assets are growing at a positive rate,but its retained earnings are not increasing,then it would be impossible for the firm's AFN to be negative.
• C) If a firm increases its dividend payout ratio in anticipation of higher earnings,but sales and earnings actually decrease,then the firm's actual AFN must,mathematically,exceed the previously calculated AFN.
• D) Higher sales usually require higher asset levels,and this leads to what we call AFN.However,the AFN will be zero if the firm chooses to retain all of its profits,i.e. ,to have a zero dividend payout ratio.
• E) Dividend policy does not affect the requirement for external funds based on the AFN equation.

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Definitions:

Frequency Recording

A method of data collection in behavior analysis that involves counting the number of times a specific behavior occurs within a set period.

Time Sampling

A behavioral observation technique that involves observing the presence or absence of behaviors within specific time intervals.

Frequency

The rate at which an event or behavior occurs over a specified period of time.

Anecdotal

Pertaining to a short and interesting story or personal account, often used as informal evidence to support a point.