How does a firm use the sgr in decision making


Questions:

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?

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