Which of the following will increase sustainable growth?
A) Buy back existing stock
B) Decrease debt
C) Increase profit margin
D) Increase asset requirement or asset turnover ratio
E) Increase dividend payout ratio

Question

Quizplus · Accepted Answer

Increasing the profit margin will increase the retained earnings, which will increase the amount of capital available for reinvestment, thereby increasing sustainable growth.

Note: Options A, B, and E will decrease the capital available for reinvestment, and option D will increase the asset base, which may not necessarily translate into increased profitability and growth.

Which of the Following Will Increase Sustainable Growth