Firms that achieve higher growth rates without seeking external financing

Question

Quizplus · Accepted Answer

Firms with less equity and/or high net income are able to reinvest earnings and generate higher growth rates without relying on external financing. A low plowback ratio (A) means that the firm is paying out more earnings as dividends and retaining a smaller portion for reinvestment, which would not lead to a higher growth rate. Highly leveraged firms (C) may have limited access to external financing and may be more focused on debt repayment rather than growth.

Firms That Achieve Higher Growth Rates Without Seeking External Financing