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?