Q197
The sustainable growth rate of a firm can be calculated as the product of the_________.
A.
return on assets and the return on equity
B.
dividend payout ratio and leverage
C.
retention rate and the return on equity
AnswerD.
net profit margin and total sales
Answer: Option C
Solution
Answer: Option C
Solution:
The sustainable growth rate of a firm can be calculated as the product of the retention rate and the return on equity. The sustainable growth rate (SGR) is the maximum rate of growth that a company can sustain without having to finance growth with additional equity or debt.