Which of the Following Statements About the Sustainable Growth Rate

question 88

Multiple Choice

Which of the following statements about the sustainable growth rate (SGR) is true?

• A) The higher a firm's ROE, the higher the SGR.
• B) The higher the plowback ratio, the larger the proportion of net income retained in the firm and the greater the firm's SGR.
• C) Both A and B are true statements.
• D) None of these are true

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Definitions:

Exponentiation

An arithmetical process that uses two numbers, known as the base and the exponent, in which the base is elevated to the power indicated by the exponent.

Multiplication

A mathematical operation that calculates the total of one number added to itself a specified number of times.

Equivalent Fraction

Fractions that, although they have different numerators and denominators, represent the same part of a whole.

Division

A mathematical operation involving the process of dividing one number by another to find how many times the divisor fits into the dividend.