If a firm equates its pro forma sales growth to the rate of sustainable growth, and has positive net income and excess capacity, then the:
A. maximum capacity level will have to increase at the same rate as sales growth.
B. total assets will have to increase at the same rate as sales growth.
C. debt-equity ratio will increase.
D. retained earnings will increase.
E. number of common shares outstanding will increase.
Ans: D. retained earnings will increase.
Business
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