6 Questions
What is the formula for the internal growth rate (Sustainable Growth Rate)?
g = ROE x (1 – Dividend Payout Ratio)
What does ROE stand for in the context of the internal growth rate formula?
Return on Equity
How is the dividend growth rate related to the internal growth rate?
The dividend growth rate is subtracted from the ROE to calculate the internal growth rate
What is the formula for calculating the dividend growth rate using the Arithmetic Mean Model?
$Gi = (\frac{Dividend_{Di} - Dividend_{Di-1}}{Dividend_{Di-1}}) \times 100$
How is the dividend growth rate calculated using the Dividend Growth Rate formula?
$Dividend Growth Rate = (\frac{G1+G2+ ……. +Gn}{n})$
What does the formula $Dividend Growth Rate = (\frac{Dividend_{Dn}}{Dividend_{D0}})^{\frac{1}{n}} - 1$ represent?
The compound annual growth rate (CAGR) of dividends
Test your knowledge of sustainable growth rate and dividend growth rate with this quiz. Explore the relationship between ROE, dividend payout ratio, and a company's ability to grow without external financing.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
