Using the Sustainable Growth Rate for Managing Growth: The Case of Meta Abo Brewery
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Date
2003-02
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A.A.U
Abstract
This paper addresses the financial aspect of managing growth in Meta Abo
Brewery. The period taken into consideration is from 1987 to1998 and it is
divided into the pre and post public enterprises reform periods.
The findings revel that the actual growth rate of the enterprise was not in
harmony with the sustainable growth rate that should have been attained for
the period considered. The company was rapidly growing before the reform.
After the reform it was growing slowly. Therefore, the researcher
recommends that management closely examine the company's growth plans
using the sustainable growth rate.
The alternative of reducing the dividend payout or giving out elevated sum of
dividend is not in the domain of the company's decision making, and hence
it is suggested that the government should take a policy decision regarding
dividend payment. The enterprise should be able to decide upon its dividend
payment in line with its growth plan and its fund requirement. In addition,
the researcher also recommends improvement in the asset turnover to avoid
problems that may arise from rapid growth.
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Meta Abo Brewery