The internal capital growth rate for a bank is a function of which of the following factors?
A)Profit margin.
B)Asset utilization.
C)Equity multiplier.
D)Earnings retention ratio.
E)All of the options are correct.

Question

Quizplus · Accepted Answer

The internal capital growth rate for a bank is influenced by a combination of factors including profit margin (how much profit the bank makes for each dollar of sales), asset utilization (how efficiently the bank uses its assets to generate sales), equity multiplier (a measure of a bank's financial leverage), and earnings retention ratio (the proportion of earnings retained after dividends are paid, rather than distributed to shareholders). These factors together determine how effectively a bank can grow its capital internally without needing to seek external funding.

The Internal Capital Growth Rate for a Bank Is a Function