Sustainable Growth: Grow and Broke Empirical Study on Manufacturing Sector Companies Listed on the Indonesia Stock Exchange


Sales growth is one of the indicators of firm’s performance. However, high sales growth does not guarantee high stakeholder value. This is shown by the relationship of sales growth (AGR) and sustainable growth (SGR), as well as balance growth (BGR). This study is conducted using a 466 sample of manufacturing companies listed on the Indonesia Stock Exchange from 2012 to 2016. Paired sample test and compared mean one-way ANOVA are used to see the difference in Net Profit Margin, Assets Turnover, Dividend Payout Ratio, Price Earnings Ratio, and Debt to Equity Ratio of AGR, BGR, and SGR sample group are classified based on low, medium, and high rank. The results show that (1) high sales growth cannot be used to explain high Net Profit Margin and Assets Turnover; (2) companies with high BGR also have high DPR and PER. However, it is believed that high BGR should lead to lower DER. Nonetheless, this study found that companies with high SGR have higher debt in their financing, indicating ‘Growth and Broke’ has occurred.



Keywords: actual growth, balance growth, sustainable growth, ‘Grow and Broke’

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