As a firm grows, it must support increases in revenue with new investments in assets. The self$-$supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows $($increases in noncash assets$)$ and inflows $($funds resulting from increases in liabilities or equity$).$

Consider the following case of Green Moose Industries:

Green Moose Industries has no debt in its capital structure and has $$300,000,000$ in assets. Its sales revenues last year were $$120,000,000$ with a net income of $$2,000,000.$ The company distributed $$180,000$ as dividends to its shareholders last year.

Given the information above, what is Green Moose Industries$$s sustainable growth rate?

$0\mathrm{.}06\%$

$4\mathrm{.}15\%$

$0\mathrm{.}52\%$

$0\mathrm{.}61\%$

Which of the following are assumptions of the sustainable $($self$-$supporting$)$ growth model? Check all that apply.

The firm uses all equity and no debt financing.

The firm maintains a constant ratio of assets to equity.

The firm must issue the same number of new common shares that it issued last year.

The firm maintains a constant net profit margin.