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Sustainable Growth Rate: An Analysis Regarding the Most Traded Companies on the Bucharest Stock Exchange

In: Emerging Issues in the Global Economy

Author

Listed:
  • Diana Elena Vasiu

    (Lucian Blaga University of Sibiu)

  • Livia Ilie

    (Lucian Blaga University of Sibiu)

Abstract

The concept of sustainable growth rate was originally developed by Robert C. Higgins. In the case of companies with given stable financial policies, it is considered to be the link between growth-return rate combinations that gives a balanced growth line. This indicates the possibilities for a company to grow without generating deficits or cash surpluses. Increased sales require more assets, which can be financed by new debt, external equity, and internal equity through retained earnings. The sustainable growth rate is the maximum rate at which company sales can increase without decreasing its financial resources. The aim of this paper is to determine if the last year most traded companies on the Bucharest Stock Exchange (BSE) have registered growth and if it was a sustainable one. Our research is based on two hypotheses: (1) the analyzed companies have a constant growth and the growth is sustainable and (2) the main factor that is influencing SGR is the retention rate. The results are only partially validating these hypotheses.

Suggested Citation

  • Diana Elena Vasiu & Livia Ilie, 2018. "Sustainable Growth Rate: An Analysis Regarding the Most Traded Companies on the Bucharest Stock Exchange," Springer Proceedings in Business and Economics, in: Silvia Cristina Mărginean & Claudia Ogrean & Ramona Orăștean (ed.), Emerging Issues in the Global Economy, chapter 0, pages 381-394, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-71876-7_34
    DOI: 10.1007/978-3-319-71876-7_34
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    Cited by:

    1. Mihai Carp & Leontina Păvăloaia & Constantin Toma & Iuliana Eugenia Georgescu & Mihai-Bogdan Afrăsinei, 2020. "Companies’ Sustainable Growth, Accounting Quality, and Investments Performances. The Case of the Romanian Capital Market," Sustainability, MDPI, vol. 12(22), pages 1-16, November.

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