Firms that achieve higher growth rates without seeking external financing

Question

Quizplus · Accepted Answer

A firm with a high plowback ratio indicates that they are reinvesting a significant portion of their earnings back into the business rather than distributing it to shareholders or seeking external financing. This can lead to higher growth rates without the need for external financing. Additionally, firms with less equity and/or high net income will have a higher return on equity (ROE), which can also contribute to higher growth rates. Finally, firms that are not highly leveraged are less reliant on external financing and can use their own internal resources to fuel growth. Therefore, all of the above options are true for firms that achieve higher growth rates without seeking external financing.

Firms That Achieve Higher Growth Rates Without Seeking External Financing