If a fiRm Bases Its Growth Projection on the Rate

question 80

Multiple Choice

If a firm bases its growth projection on the rate of sustainable growth, and shows positive net income, then the:

• A) Fixed assets will have to increase at the same rate, regardless of the current capacity level.
• B) Number of common shares outstanding will increase at the same rate of growth.
• C) Debt-equity ratio will have to increase.
• D) Debt-equity ratio will remain constant while retained earnings increase.
• E) Fixed assets, debt-equity ratio, and number of common shares outstanding will all increase.

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Definitions:

P-value

The probability of observing results at least as extreme as those measured when the null hypothesis is true.

Hypotheses

Statements or predictions that can be tested through scientific research, designed to explain phenomena or the relationship between variables.

Population Proportion

The fraction of members in a group that possess a particular characteristic, often expressed as a percentage of the total population.

Confidence Interval

An assortment of values, from sampled evidence, which possibly contains the value of an unknown parameter of the population.