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The sustainable growth rate of the company

Temporary and permanent personnel provider for accounting, finance and IT.
Financial data see attachment.
a) Comparing the company's sustainable growth rate with its actual growth rate in sales, what growth problems did the company face over the period?
b) The first dividend was paid in 2004. Assess the company's decision to pay dividends.
c) Considering economic conditions 2000 - 2004, what was a likely cause of the growths problems?


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Dear Student,

The sustainable growth rate of the company is higher than the actual growth rate for years 2000,2001 and 2002. However the reverse is the case for years 2003 and 2004. If we look at the profit margin for years 2000,2001,2002, we see that the margins are reducing and even in 2003, it is no better. There is a turnaround in the profit margin in 2004 which is a healthy sign. Generally if the profit margins are low, it means either the sales units are less or the cost of operations are so high or an effect of both. If we look ...

Solution Summary

The sustainable growth rate of the company is evaluated.