Abstract:
Sustainable growth is a crucial concept that companies aspire to when
strategically preparing for their survival in the long run. Using the PRAT model,
the study examines the impact of company performance on the sustainable
growth rate by considering company-specific indicators such as net profit margin
(P), retention rate (R), asset turnover (A), financial leverage (T), and financial
liquidity (FL) with firm size (FS) as a control variable. In line with the Higgins
theory, the study compares the average actual sales growth rate (AAGR) with the
average sustainable growth rate (ASGR) among listed financial sector
companies. The study employed a quantitative research technique, with
secondary data gathered from financial sector businesses listed on the CSE from
2017 to 2021. A panel regression model was used to examine the acquired data.
The company's operating performance metrics and financial policy metrics have
a positive and significant impact on the sustainable growth rate of Sri Lankan
financial sector companies. Furthermore, the study highlights that the impact of
operating components on the sustainable growth rate is much greater than the
financial policy indicators. It signifies that, in the Sri Lankan context, creating
the company's operational performance and profitability development plans
would possibly greatly increase long-term growth. The study observed that
financial liquidity implies a negative impact on the sustainable growth rate, but it
doesn't appear significant in the context of Sri Lankan listed financial sector
firms. The study reveals that the notion of sustainable growth is critical in
financial planning and that company performance promotes sustainable growth
and helps to ensure long-term viability in the financial sector by creating
standards and procedures to sustain the value of their entire businesses as
sustainable growth companies to transform the Sri Lankan economy.
