The maximum growth rate that can be achieved financing asset growth with new debt and retained earnings is called the:
A)internal growth rate.
B)retention rate.
C)sustainable growth rate.
D)operating expansion rate.

Question

Quizplus · Accepted Answer

The maximum growth rate that can be achieved financing asset growth with new debt and retained earnings is called the sustainable growth rate. This rate represents the level of growth a company can sustain without having to raise additional outside capital. It is calculated by multiplying the retention rate (percentage of earnings retained) by the return on equity (ROE), and can be a useful measure for companies looking to plan for future growth while maintaining financial stability. Options A, B, and D are not correct as they do not accurately describe the concept of sustainable growth rate.

The Maximum Growth Rate That Can Be Achieved Financing Asset