Asked by Carol Jasso on Jun 12, 2024
Verified
Consider that you are a finance manager, and one of your junior staff wanted an explanation of the term sustainable growth rate (SGR). Provide a definition that conveys what the term means from a finance perspective.
Sustainable Growth Rate (SGR)
The growth rate a firm can maintain given its debt capacity, ROE, and retention ratio.
Finance Perspective
An approach or viewpoint focusing on the management, creation, and study of money, banking, credit, investments, assets, and liabilities.
- Clarify the presuppositions that form the basis for the sustainable growth rate and discuss its consequences for an organization's future.
Verified Answer
SB
Samantha BeaulieuJun 16, 2024
Final Answer :
The term can best be defined as the growth rate a firm can maintain given its debt capacity, ROE, and retention ratio.
Learning Objectives
- Clarify the presuppositions that form the basis for the sustainable growth rate and discuss its consequences for an organization's future.
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