Growth Rate

by

Business Finance

Question Text

How does a company assess its sustainable growth rate (SGR)?

  • How does a firm use the SGR in decision making?
  • What are the consequences for a firm that grows a higher rate than its SGR?
  • What are the consequences for a firm that grows at a lower rate than its SGR?
  • Which variables are used in calculating the SGR?
  • How does a firm use the SGR in choosing a financing option?
  • How does a firm finance a growth that is higher than its SGR?
  • What is the opportunity cost for a firm that grows at a lower rate than its SGR?

Consider the following ideas to include in your answer: