All of the Following Statements Are Correct Except

question 123

Multiple Choice

All of the following statements are correct except:

• A)The internal growth rate measures how quickly a firm can increase its asset base over the next year without raising outside funds.
• B)The retention rate represents the proportion of every $1 of earnings per share that is retained by the firm; in other words, it is equal to one minus the dividend payout ratio.
• C)The sustainable growth rate measures how quickly the firm can grow when it uses both internal equity and debt financing to keep its capital structure constant over time.
• D)The internal and sustainable growth rate relationships suggest that there are three measurable influences on growth: dividend policy (as reflected in the retention rate), profitability (as measured by ROA), and the firm's capital structure (as measured by the equity multiplier).
• E)All of the above statements are correct.

Identify the characteristics and benefits of different types of retirement plans (e.g., 401k, Roth IRA).

Apply the concept of time value of money to retirement saving and investment strategies.

Evaluate investment choices based on their potential tax benefits or liabilities.

Learn the importance of annual contributions and their effects on the future value of retirement savings.

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Definitions:

Peer Group

A set of companies or individuals that share similar characteristics or interests, often used as a benchmark for performance comparison.

Return on Assets

is a financial ratio that measures how profitably a company can utilize its assets to generate earnings.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that excludes interest and income tax expenses.

Net Income

The total earnings of a company after deducting all expenses from its total revenue, often referred to as the bottom line.