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?
Consider the following ideas to include in your answer:
• 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?
