Difference between revisions of "Sustainable Growth Rate"

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(Created page with "The sustainable growth rate is the maximum growth rate, measured in sales, that a company can afford without adding extra external capital. The formula is: SG = <math>\frac{R...")
 
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The sustainable growth rate is the maximum growth rate, measured in sales, that a company can afford without adding extra external capital. The formula is:
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Sustainable Growth Rate
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SG = <math>\frac{R * {Return\ on\ Equity}}{1 - r*{Return on Equity}}</math>
 
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Where
 
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<math>R = Retention rate = 1 - Dividend payout rate</math>
 
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If the actual growth rate is bigger than the sustainable growth rate: [[Cash Absorber|Cash Absorber]]
 
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If the actual growth rate is smaller than sustainable growth rate: [[Cash Generator|Cash Generator]]
 
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[[Category:finance]]
 
[[Category:finance]]
  

Revision as of 18:39, 27 August 2020

Sustainable Growth Rate

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