?

Corporate Finance

Free Version

Upgrade subject to access all content

Easy

Understanding the Basics of the Sustainable Growth Rate

CORPFN-HSTRTY

Which of the following statements is/are true about the sustainable growth rate? Select ALL that apply.

A

The sustainable growth rate demands exclusive external equity financing to calculate.

B

The sustainable growth rate is the maximum growth rate an organization can achieve without external equity financing while maintaining a constant debt-equity ratio.

C

The sustainable growth rate is the maximum growth rate a firm can maintain without increasing its financial leverage.

D

When determining sustainable growth, the organization must determine the appropriate debt to equity ratio that is optimal for their purposes.