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Cash-Flow Sustainable Growth Rate Models

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  • Alin Constantin RADASANU

    (Alexandru Ioan Cuza University, Iasi, Romania,)

Abstract

The internal funding of a company is limited by the ability to generate enough cash-flow from operational activities. External funds aimed at growth are associated with increased risks and with the need to have investment projects. Recent research has shown that the spread of the financial crisis is associated with excessive external funding aimed at stimulating the growth of businesses. The limitations of external funding are well-known: capital market funding determines unwanted costs and changes in the ownership structure, while bank funding determines costs that erode operational margins. In the light of the above, it can be said that, in most circumstances, growth should be financed using internally-generated funds. Using the sustainable growth rate, managers and investors can establish whether their plans for increasing revenues are realistic and whether they are based on actual operational and financial performance.

Suggested Citation

  • Alin Constantin RADASANU, 2015. "Cash-Flow Sustainable Growth Rate Models," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 7(7), pages 62-70, June.
    • Handle: RePEc:aic:jopafl:y:2015:v:7:p:62-70
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    References listed on IDEAS

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    1. Onofrei, Mihaela & Lupu, Dan, 2014. "The modelling of forecasting the bankruptcy in Romania," MPRA Paper 95511, University Library of Munich, Germany.
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    Cited by:

    1. SUNTRARUK Phassawan, 2023. "The Mediating Effect Of Profitability On The Relationship Between Working Capital Management And Sustainable Growth," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 18(1), pages 314-327, April.
    2. Isnurhadi & Sulastri & Yulia Saftiana & Ferry Jie, 2022. "Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries," Sustainability, MDPI, vol. 15(1), pages 1-21, December.

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