If a firm equates its pro forma sales growth to the rate of …..capacity, then the:

Corporate Finance

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:

maximum capacity level will have to increase at the same rate as sales growth.
total assets will have to increase at the same rate as sales growth.
debt-equity ratio will increase.
retained earnings will increase.

Note

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 retained earnings will increase.

Tags: Long-Term Financial Planning and Growth

Note

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