A firm can achieve a higher growth rate without raising external capital by: (within limits)

Question

Quizplus · Accepted Answer

By increasing its plowback ratio, the firm can retain more earnings for reinvestment into the business, leading to potential growth without raising external capital. This assumes that the firm has profitable investment opportunities and that the retained earnings are being used effectively. Increasing debt or decreasing inventory turnover may help increase short-term growth, but may not be sustainable in the long-run and could lead to financial instability. Increasing the current ratio may improve the firm's liquidity but may not necessarily result in higher growth.

A Firm Can Achieve a Higher Growth Rate Without Raising