Issue 4, 2009

Ivashkovskaya I. V., Zhivotova E. L. Sustainable Growth Index: Empirical Tests for the Russian Companies.

We introduce new toolkit for financial analysis of corporate growth which we call sustainable growth index. The new measurer contributes to the development of financial evaluation of corporate strategies based on the capacity to generate residual income within the company. We use the sample of 26 Russian large-scale companies with financial reports based on IAS within the period of 2002–2007 to provide empirical tests for our approach. To identify the path to sustainable growth we study the types of growth and step – back movements by applying two types of matrices. We compare the results to specific changes in 2008 companies’ dynamics due to financial crisis. The empirical results prove that sustainable growth index is a powerful analytical approach applicable for strategy evaluation in public corporations as well as in closely held companies. Keywords: Sustainable Growth, Economic Profit, Spread on Capital Employed, Value of the Company.

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