Sustainable growth rate

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Sustainable growth rate

Maximum rate of growth a firm can sustain without increasing financial leverage.

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.
References in periodicals archive ?
This increases the firm's need for new assets as sales grow thereby increasing the sustainable growth rate.
Georgas insisted that the stock's current valuation doesn't reflect Colgate's sustainable growth rate and level of risk.
While ministers estimate the UK's long-term trend or sustainable growth rate to be about 2.
While ministers estimate the UK's long term trend or sustainable growth rate to be about 2.
1% in 2003 and 2004, below the central bank's top sustainable growth rate of 3.
7 per cent in the third quarter, although an improvement on the first and second quarters, is still below the economy's long-term sustainable growth rate.
In this scenario successful economic reforms in Iran are put in place, and a high capital investment rate is maintained in all sectors consistent with achieving a sustainable growth rate >4% per year on average in the economy over the period 2000-2015.
The current article extends that analysis into an understanding of how income taxes affect the return-on-equity ratio and how the firm's profitab ility performance and dividend policy affect its sustainable growth rate.
But monetary policy cannot do much to determine how high the sustainable growth rate is.
Recent literature (see, for example, Fuld, 1992) stresses analytic procedures and techniques such as benchmarking, which involves introspection as well as examination of external competitors (see, for example, Bruder, 1992; Bookhart, 1993), sustainable growth rate analysis (see, for example, Harkleroad, 1993), and financial analysis (see, for example, Jacobi, 1992).
The objectives of the general budget include maintaining the economic stability, realizing a sustainable growth rate, reducing the budget deficit by increasing the exports and decreasing the imports and reducing the poverty and unemployment rate.

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