Accounting

Sustainable Growth Rate

Sustainable Growth Rate

Sustainable Growth Rate is the maximum growth rate that the firm can sustain and never having to increase financial influence. The Sustainable Growth Rate (SGR) identifies optimal growth from a financial perspective assuming a given strategy with clear defined financial limitations. Sustainable growth is defined as the annual percent of increase in sales which is consistent with a precise financial policy. This concept comes with a comprehensive financial framework and formula with regard to company specific SGR calculations.