A firm's growth rate equals the retention ratio times its return on equity.

Name: A firm's growth rate equals the retention ratio times its return on equity.
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The growth rate of a firm (often referred to as the sustainable growth rate) is indeed calculated as the retention ratio (the proportion of earnings not paid out as dividends) times its return on equity (ROE). This formula reflects how much profit is reinvested in the company to fuel its growth.

A Firm's Growth Rate Equals the Retention Ratio Times Its