The sustainable growth rate will be equivalent to the internal growth rate when:
A) a firm has no debt.
B) the growth rate is positive.
C) the plowback ratio is positive but less than 1.
D) a firm has a debt-equity ratio exactly equal to 1.
E) net income is greater than zero.

Question

Quizplus · Accepted Answer

When a firm has no debt, the sustainable growth rate, which considers both equity and debt financing, becomes equivalent to the internal growth rate, which considers only equity financing.

The Sustainable Growth Rate Will Be Equivalent to the Internal