A Firm's Sustainable Growth Rate Represents The

question 68

Multiple Choice

A firm's sustainable growth rate represents the:

• A)Highest growth rate without decreasing the dividend
• B)Highest growth rate without increasing financial leverage
• C)Percentage change in sales times the profit margin
• D)Possible growth without jeopardizing net working capital Internal growth rate = plowback ratio x ROE x (equity/assets)
• )06 = .41 x (.11 x asset turnover x 2) x .5
• )06 = .2 x (.2 asset turnover)
• )06/.04 = .04 asset turnover/.04

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Definitions:

Split-Off

A point in the manufacturing process where joint products are separated and continue through the production process as distinct items.

Sales Margin

The difference between the selling price of a product and its cost of sales, usually represented as a percentage of sales.

Changing Technology

The rapid evolution and adoption of new techniques, tools, and software which can disrupt industries and alter business operations.

Scrap

Material waste or remnants resulting from manufacturing processes, which may have a recoverable value or can sometimes be reused or recycled.