________ is the maximum growth rate a firm can achieve without resorting to external financing.
A)Return on equity
B)Sustainable growth rate
C)Retention rate
D)Internal growth rate
E)Asset expansion rate

Question

Quizplus · Accepted Answer

Internal growth rate is the maximum growth rate a firm can achieve without resorting to external financing. This growth rate is calculated based on the firm's retained earnings and asset turnover ratio. Retention rate and asset expansion rate are not used to calculate the internal growth rate. Return on equity (ROE) is a profitability measure and not a growth rate. The sustainable growth rate (B) is the maximum growth rate a firm can achieve while maintaining a constant debt-to-equity ratio.

________ Is the Maximum Growth Rate a Firm Can Achieve