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  • MGT 2301 (Sustainable Growth Rate) (060120a) (Quercus) - 2

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    Daniel Gao
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    The Sustainable Growth Rate (SGR) model is used to determine the maximum growth rate a firm can sustain without issuing new equity or drastically changing its target debt to equity ratio. A firm's SGR is calculated based on its retention ratio (the proportion of net income retained rather than paid out as dividends) and its return on equity (ROE). The higher a firm's retention ratio and ROE, the higher its sustainable growth rate will be according to the SGR model.

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    MGT 2301 (Sustainable Growth Rate) (060120a) (Quercus)_2

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    The Sustainable Growth Rate (SGR) model is used to determine the maximum growth rate a firm can sustain without issuing new equity or drastically changing its target debt to equity ratio. A firm's SGR is calculated based on its retention ratio (the proportion of net income retained rather than paid out as dividends) and its return on equity (ROE). The higher a firm's retention ratio and ROE, the higher its sustainable growth rate will be according to the SGR model.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    8 views1 page

    MGT 2301 (Sustainable Growth Rate) (060120a) (Quercus) - 2

    Uploaded by

    Daniel Gao
    The Sustainable Growth Rate (SGR) model is used to determine the maximum growth rate a firm can sustain without issuing new equity or drastically changing its target debt to equity ratio. A firm's SGR is calculated based on its retention ratio (the proportion of net income retained rather than paid out as dividends) and its return on equity (ROE). The higher a firm's retention ratio and ROE, the higher its sustainable growth rate will be according to the SGR model.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Sustainable Growth Rate Example (G.

    Donaldson 1984)

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