A firm expects growth next year to be 10%. Its sustainable growth rate is 12%. Which of the following is true?
A) The firm will need to raise additional debt such that its debt to equity ratio will increase.
B) The firm may be able to keep its debt to equity ratio the same by reducing dividends (assuming they are projected to be high enough).
C) The firm will need to raise additional capital through a stock issue.
D) The firm will have excess cash to increase dividends, pay back debt, or repurchase equity.
Answer: D
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Generally accepted accounting principles require that organizations report all assets at their current fair market values (i.e. the amount for which they could be sold to a third party).
a. true b. false
Current liabilities are short-term obligations that will be paid within the current operating cycle of the business or within one year of the balance sheet date, whichever is longer.
a. true b. false