Explain the different assumptions of Sustainable Growth Rate Model.
CA Final · Advanced Financial Management · MTP · November 2026
Explain the different assumptions of Sustainable Growth Rate Model.
Suggested Answer and Working Notes:
Sustainable growth models assume that the business wants to:1) maintain a target capital structure without issuing new equity;2) maintain a target dividend payment ratio; and3) increase sales as rapidly as market conditions allow.
Topics: Theoretical Questions
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