Sustainable Growth In Zambia

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CONCERN: 3 SUSTAINABLE GROWTH Sustainable growth is the maximum rate at which a company can grow without taking on any further debt financing. The sustainable growth is calculated as follows: ROE x (1- dividend pay-out ratio). The many factors that influence a company’s growth rate. It is important to understand that growth rate is more qualitative than it is quantitative. When determining the growth rate of an entity a variety of factors such as management and operations need to be taken into account for valuation purposes. A sustainable growth rate comes from the ability of an entity to sell its products or provide its services, and then ultimately turning its profits into free cash flows. Both internal and external factors must be considered…show more content…
• Competitors- More established companies like Toyota and Cat Lift Trucks are extremely competitive in the market. • Tax and government policies- The mining industry in Zambia is currently under pressure due to high taxes imposed onto companies by the government, this is also affecting production. • Energy Supply- This a national energy deficit in Zambia that can impact the operations of the mining industry. On the latter, macroeconomic factors can have positive influence e.g. the power deficit in Zambia has forced ECM Group to explore biomass waste renewable energy solutions. The company Even though Zambia accounts for the 10% of the world’s copper production, putting mines into production seems be little challenging due to factors such as political unrest, mining legislation that is constantly changing, a national energy deficit and poor infrastructure. On the latter macroeconomic factors can have positive influence e.g. the power deficit in Zambia has forced ECM to explore biomass waste renewable energy solutions. The…show more content…
Advancements in bulk material handling equipment has its pros and cons. Companies like ECM in Zambia contributes to 10% of formal employment in Zambia. Should more automated equipment be used there is a likelihood that people could their jobs. Growth is good but too much it can have adverse consequences. Rapid growth could result in a company experiencing shortages and an increase in expansion costs Industry growth rates In addition to macroeconomic growth rates, specific industries also have growth rate. Each industry has its own set of benchmark rates that its performance is measures against. The global growth rate within the mining industry is currently 8.3% and stands as 5.5% in Zambia. The growth rate in the valuation of 13% is above the current global and below the current Zambian growth rates. The global bulk material handling market is expected to grow at a flat rate of 1.2%. . Once you are confident in the company’s direction and its ability to actually achieve growth, then do you compute a
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