What Proportion of Earnings Is Being Plowed Back into the Firm

question 74

Multiple Choice

What proportion of earnings is being plowed back into the firm if the sustainable growth rate is 8 percent and the firm's ROE is 20 percent?

• A)8 percent
• B)12 percent
• C)20 percent
• D)40 percent 8% = 20% x plowback

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Definitions:

Quantitative Studies

Research methods involving the collection and analysis of numerical data to understand patterns, relationships, or trends within a study field.

Scientifically Rigorous

Characterized by the strict adherence to the principles of the scientific method, ensuring validity and reliability in research findings.

Validity

The accuracy of a given measurement.

Consistency Result

Consistency result describes a situation in logic or mathematics where a set of statements or equations do not contradict each other and can coexist without generating errors.