Quiz Ch 18 – Addressing a Mismatch in Growth Rates
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What should a firm consider doing if its projected growth rate is lower than its sustainable growth rate?
What should a firm consider doing if its projected growth rate is lower than its sustainable growth rate?
How are increased requirements for net working capital typically handled?
What is the implication given a firm’s pro forma statements showing a $5,000 net income, $2,000 in dividends, and a $2,000 external financing requirement?
What is the term for the rate at which a firm’s assets can expand without the need for external financing?
What assumptions are made when determining the sustainable rate of growth?
What must serve as the equilibrium factor in a scenario where a company commits to a dividend payout and defines the level of debt it’s willing to issue?
What element should be used to maintain this balance in the financial plan of a growing company that adheres to a fixed dividend policy and wishes to avoid new shareholders?
How can a firm attain a greater growth rate without the need for additional external capital, given specific factors like the dividend payout ratio, ROE, debt-to-asset ratio, and profit margin?
Which capital structure will lead to a firm’s internal growth rate exceeding its sustainable growth rate?
What is the most apparent option for the plug if a firm prefers NOT to use dividends or debt as the balancing factor?