Which of the following firms would most likely be interested in knowing their sustainable growth rate?

A) A firm that believes its equity multiplier is at its optimal level.
B) A firm that has no capacity to raise new debt.
C) A firm in a mature industry that expects limited sales growth in the future.
D) A firm that pays no dividends.
E) A firm that has a low level of investment in fixed assets.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without having to increase leverage or equity financing.

Equity Multiplier

A financial leverage ratio that measures the portion of a company’s assets that are financed by shareholders' equity.

Fixed Assets Investment

Expenditures related to acquiring or improving long-term assets such as property, plant, and equipment that will be used in business operations.