________ is the maximum growth rate a firm can achieve without resorting to external financing.
A) Return on equity
B) Sustainable growth rate
C) Retention rate
D) Internal growth rate

Question

Quizplus · Accepted Answer

The maximum growth rate a firm can achieve without resorting to external financing is known as the internal growth rate. It is determined by the firm's profit margin and dividend payout ratio, and represents the amount of growth the firm can generate by reinvesting earnings back into the business. The internal growth rate can be calculated using the formula: Internal Growth Rate = Retention Rate x Return on Assets or Internal Growth Rate = (Net Income / Total Assets) x (1 - Dividend Payout Ratio).

________ Is the Maximum Growth Rate a Firm Can Achieve