Sustainable growth rate

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Sustainable growth rate

Maximum rate of growth a firm can sustain without increasing financial leverage.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Sustainable Growth Rate

The amount that a company or economy can grow without having to increase borrowing. A sustainable growth rate is desirable because it satisfies the needs of the company or economy without increasing its fixed costs (in this case, borrowing costs), which can create significant problems if the growth slows or begins to decline.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Ashta A (2008) Sustainable growth rates: refining a measure.
Based on the average sustainable growth rates of the 30 companies belonging to the PSE index for the past three years, the median growth rate is about 7.9 percent, which is higher than the inflation target of 4.5 percent.
With Outlook Stable, the upgrade of the IDRs reflects the following key rating drivers: Strong and consistent macroeconomic performance has continued, underpinned by sound policies that are supporting high and sustainable growth rates. Investor sentiment has also remained strong, which is evident from solid domestic demand and inflows of foreign direct investment.
The other building block of sustainable growth rates is Britain's productivity - the amount of output produced for every hour worked.
In a statement, Fitch said the Philippines' "strong and consistent macroeconomic performance has continued, underpinned by sound policies that are supporting high and sustainable growth rates."
The fiscal watchdog said that it believes the most effective way of achieving sustainable growth rates and protect against risks, or at least mitigate their possible impact, is to continue immediately with reforms that "improve the economy's competitiveness and the containment of public spending which will reduce the likelihood of fiscal derailment that would threaten economic stability".
Asked when India could achieve 9 per cent GDP growth, he said it is difficult to predict sustainable growth rates. Higher growth rate is possible if very fundamental reforms, especially in factors of production like land and labour, are undertaken, the Governor said.
This should be lowered to 2 percent, allowing for a more balanced economic policy mix, with the emphasis on reducing taxation, encouraging private investment and contributing to sustainable growth rates.'
It added that the comfortable liquidity with no exposure to the ECB emergency liquidity or other ECB monetary operations create the conditions for the support of the Cypriot economic activity in the great effort to restore the economy to sustainable growth rates."
Al-Rashed added that the strength and durability of the financial position of the bank is the solidity and the quality of its assets and diversity, which contributed to the achievement of steady and sustainable growth rates that reflect the Bank's commitment to the strategies adopted by the board of directors, which responds to the aspirations of the Bank's shareholders and enhancing the return on their investment.
A slowdown in China, towards more sustainable growth rates, will see GDP growth drop from a 7.3 per cent growth rate in 2014 to a 7.1 per cent rate in 2015 and a 6.9 per cent rate in 2016.

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