The Sustainable Rate of Growth

question 9

Multiple Choice

The sustainable rate of growth:

• A) increases as the dividend payout ratio increases.
• B) must be moderate over the long-term even if it is high in the short-term.
• C) assumes the debt-equity ratio will increase at the same rate as the growth rate.
• D) must exceed the required rate of return to be used in the dividend discount model.

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Definitions:

Ending Inventory

The total value of a company's merchandise, raw materials, and products left unsold at the end of an accounting period.

Moving Average

A statistical measure used to analyze data points by creating a series of averages of different subsets of the full data set.