A Sustainable Growth Rate Analysis of Non-Financial Companies Listed on the Banja Luka Stock Exchange
DOI:
https://doi.org/10.7251/ACE1624053RKeywords:
the sustainable growth rates, Banja Luka Stock Exchange, revenuesAbstract
In this research project and paper, we propose to assess the sustainable growth rates of non-financial companies listed on the Banja Luka Stock Exchange. A company’s sustainable growth rate is the maximum rate its sales can grow, given the company’s profitability, earnings retention, asset management, and financial leverage. A company’s sales cannot grow at a rate higher than its sustainable growth rate unless one or more of these levers of performance increases or the company issues additional equity. Companies that grow at rates higher than their sustainable growth rates and finance the their asset growth with debt financing experience higher financial leverage that can lead to financial distress and ultimately bankruptcy.
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