Firms that achieve higher growth rates without seeking external financing

Question

Quizplus · Accepted Answer

Firms that achieve higher growth rates without seeking external financing have a high plowback ratio, which means they retain a large portion of their earnings for reinvestment in the business. This leads to less equity and/or high net income, resulting in a high return on equity (ROE). Additionally, these firms are likely not highly leveraged, as they have not needed to take on debt to finance their growth. Therefore, all of these factors contribute to firms achieving higher growth rates without seeking external financing.

Firms That Achieve Higher Growth Rates Without Seeking External Financing