Firms that achieve higher growth rates without seeking external financing

Question

Quizplus · Accepted Answer

This is because firms with high net income have the ability to reinvest profits into the company, leading to higher growth rates without the need for external financing. Additionally, these firms may have less equity because they are able to generate profits internally and therefore do not need to rely on external sources of funding. A low plowback ratio (A) indicates that the firm is not reinvesting a significant portion of its earnings, while high leverage (C) can indicate a higher level of risk and dependence on external financing.

Firms That Achieve Higher Growth Rates Without Seeking External Financing