Sustainable growth can be determined by the:
A)profit margin, total asset turnover and the price to earnings ratio.
B)profit margin, the payout ratio, the debt-to-equity ratio, and the asset requirement or asset turnover ratio.
C)Total growth less capital gains growth.
D)Either A or B.
E)None of the above.

Question

Quizplus · Accepted Answer

Sustainable growth can be determined by analyzing the company's profitability (profit margin), dividend policy (payout ratio), financial leverage (debt-to-equity ratio), and asset utilization (asset requirement or asset turnover ratio). This allows investors to assess the company's ability to grow while maintaining financial stability and avoiding excessive debt. Choice A does not take into account debt levels, while choice C is not a comprehensive analysis of sustainable growth.

Sustainable Growth Can Be Determined by The