If a Firm Bases Its Growth Projection on the Rate

question 86

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:

Batholith

A large mass of intrusive igneous rock, often granite, that has crystallized deep in the Earth's crust.

Oceanic Settings

Environmental conditions pertaining to the ocean, including its physical, chemical, and biological characteristics.

Volcanic Islands

Islands that are formed from the eruption of volcanoes on the ocean floor, often emerging above sea level.

Flood Basalts

Large-volume basaltic lava flows that cover vast areas.