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<p>This paper investigates the intercompany-specific characteristics as a determinant of the sustainable growth rate. We researched a sample of companies listed on the Macedonian stock exchanges. We found that the average actual growth rate for the 2010-2019 period is only 0.38%, while the sustainable growth rate was 1.42%. This is because of the poor operating performance of the companies, moderate leverage, and average retention ratio of 82.5% for the whole sample. The actual growth rate in specific years is drastically higher than the sustainable growth rate, while in certain years it is negative. The sustainable growth rate is positively affected by the profit margin, retention ratio, asset turnover, financial leverage, and ROE, and it is negatively affected by the operating cash flow, company size, growth opportunities, and non-debt tax shield.</p>
</abstract>

This paper investigates the intercompany-specific characteristics as a determinant of the sustainable growth rate. We researched a sample of companies listed on the Macedonian stock exchanges. We found that the average actual growth rate for the 2010-2019 period is only 0.38%, while the sustainable growth rate was 1.42%. This is because of the poor operating performance of the companies, moderate leverage, and average retention ratio of 82.5% for the whole sample. The actual growth rate in specific years is drastically higher than the sustainable growth rate, while in certain years it is negative. The sustainable growth rate is positively affected by the profit margin, retention ratio, asset turnover, financial leverage, and ROE, and it is negatively affected by the operating cash flow, company size, growth opportunities, and non-debt tax shield.

Financial Policy and Companies’ Sustainable Growth

Ss. Cyril and Methodius University in Skopje

Economic Themes

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Financial Policy and Companies\u2019 Sustainable Growth"}

This paper investigates the intercompany-specific characteristics as a determinant of the sustainable growth rate. We researched a sample of companies listed...

Financial Policy and Companies’ Sustainable Growth

Published Online: Apr 05, 2023

Page range: 281 - 301

Received: May 30, 2022

Accepted: Sep 20, 2022

DOI: https://doi.org/10.2478/ethemes-2022-0016

Keywords
financial policy, sustainable growth rate, retention ratio, dividend payout, North Macedonia

© 2022 Aleksandar Naumoski, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Financial Policy and Companies’ Sustainable Growth

Published Online: Apr 05, 2023

Page range: 281 - 301

Received: May 30, 2022

Accepted: Sep 20, 2022

DOI: https://doi.org/10.2478/ethemes-2022-0016

Keywordsfinancial policy, sustainable growth rate, retention ratio, dividend payout, North Macedonia

© 2022 Aleksandar Naumoski, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
financial policy, sustainable growth rate, retention ratio, dividend payout, North Macedonia