Holding all other variables constant, as the dividend payout ratio decreases, the sustainable growth rate increases.

Name: Holding all other variables constant, as the dividend payout ratio decreases, the sustainable growth rate increases.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This is because when the dividend payout ratio decreases, the company is retaining more earnings to reinvest into the business, which in turn increases the company's earnings and therefore its growth rate.

Holding All Other Variables Constant, as the Dividend Payout Ratio