The formula that indicates if a company embarking on a growth strategy will need to take on debt to fund this growth is called
A) the return on investment.
B) the CAPM.
C) the index of sustainable growth.
D) operating cash flow.
E) the Z-value.

Question

Quizplus · Accepted Answer

The formula that indicates if a company embarking on a growth strategy will need to take on debt to fund this growth is the index of sustainable growth. This formula takes into account the company's earnings retention rate, return on equity, and financial leverage to calculate the maximum growth rate that can be sustained without needing to take on additional debt.

The Formula That Indicates If a Company Embarking on a Growth