Which One of the Following Would Increase the Sustainable Growth

question 27

Multiple Choice

Which one of the following would increase the sustainable growth rate?

• A) Reduce the ROE.
• B) Increase the asset beta.
• C) Reduce the payout ratio.
• D) Reduce the operating leverage.

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Definitions:

Allowance Account

An account used in accounting to estimate the portion of accounts receivable that may not be collectible.

Credit Balance

A Credit Balance occurs when the total credits in an account exceed the total debits, often indicating the amount owed to the customer or client in financial contexts.

Debit Balance

A condition where the sum of debits in an account exceeds the sum of credits, implying assets or expenses.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, which is used to adjust the gross accounts receivable to its net realizable value.