Would an increase in net profit margin or

问题单项选择题

Would an increase in net profit margin or in the firm’s dividend payout ratio increase a firm’s sustainable growth rate Net profit marginDividend payout ratio（）①A. Yes Yes ②B. No No ③C. Yes No

A. ①

B. ②

C. ③

答案

参考答案：C

解析：

The sustainable growth rate is equal to ROE multiplied by the retention rate. According to the Dupont formula, an increase in net profit margin will result in higher ROE. Thus, an increase in net profit margin will result in a higher growth rate. The retention rate is equal to 1 minus the dividend payout ratio. Thus, an increase in the dividend payout ratio will lower the retention rate and lower the growth rate.