If a Firm Wants to Maintain Its Ratios at Their

question 7

True/False

If a firm wants to maintain its ratios at their existing levels, then if it has a positive sales growth rate of any amount, it will require some amount of external funding.

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Definitions:

Retained Earnings

The portion of a company's profit that is held back and not paid out as dividends, often used for reinvestment.

Dividend Payout Ratio

A financial metric that shows the proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of net income.

Sustainable Growth Rate

The highest rate at which a company can grow its earnings without needing to increase its financial leverage.

Financial Planning

The ongoing process of managing one's finances to meet personal goals and prepare for the future, involving savings, investments, and budgeting.