The internal growth rate increases when the:

A) Retention ratio decreases.
B) Dividend payout ratio increases.
C) Net income decreases.
D) Total assets decreases.
E) Plowback ratio decreases.

Internal Growth Rate

The maximum growth rate a company can achieve with its existing assets without having to finance growth with external equity or debt.

Retention Ratio

The portion of net income that is retained by a company instead of being paid out as dividends to shareholders, usually expressed as a percentage.

Plowback Ratio

Also known as the retention rate, it refers to the portion of earnings that a company retains and reinvests in its operations rather than distributing as dividends.