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Companies cannot grow faster than sustainable growth rate

An investor asserts: "A company cannot grow faster than its sustainable growth rate." True or false? Explain why.

Just less than 300 words answering why an investor may assert, "A company cannot grow faster than its sustainable growth rate." References.

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An investor asserts: "A company cannot grow faster than its sustainable growth rate." True or false? Explain why.

The answer is true. A company cannot grow faster than its sustainable growth rate. Sales grow as fast as assets are available. Increasing sales by 20% equates to increasing receivables, inventories, and fixed assets by 20%. Loans received for growth will not exceed debt-to-ratio ...

Solution Summary

A short discussion on why an investor asserts a company needs to stay within its sustainable growth rate to decrease risks and increase chances of long-term sustainability

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