Suchergebnisse

AbstractDambisa Moyo, Dead Aid: Why Aid Is Not Working and There Is Another Way for Africa, Penguin Books, London, 2009, 188 pages.

AbstractThe poor are requiring not only microcredit, but also micropayments and micro‐insurance as well as health check‐ups.

Abstract

The purpose of this paper is to improve clarity and financial analysis for calculating a firm's sustainable growth rate, a useful concept for firms growing very fast as well as those in financial distress.


The paper is based on a review of literature and textbooks concerning the concept of sustainable growth rate.


The sustainable growth rate is the rate at which a company can grow without creating a cash flow problem, a concept developed by Robert C. Higgins in 1977 and in 1981 extended by him for continuous time frameworks. For discrete time frameworks, his textbook describes sustainable growth rates as a product of four ratios: the profit margin, the retention ratio, the asset turnover and the financial leverage ratio, of which the latter divides closing total assets by opening equity.


I agree with the components but suggest a slight modification. The leverage ratio should use the figures of the same date: it should use opening total assets divided by opening equity. Mathematically, this change would require modifying the asset turnover ratio to make it sales divided by opening total assets, instead of dividing by closing total assets as used by Higgins. This modification makes more intuitive sense since sales are created by assets rather than the other way round, which is far more indirect and remote and because of the timing problem.


The paper provides a simple illustration.


This modification would also require précising that the sustainable growth rate of firms in financial distress should use the asset turnover ratio using opening assets.

Copyright © 2008 John Wiley & Sons, Ltd.

Microcredit as a response to a wicked problem responsibility for wicked problems -- Institutional study of microcredit : successes and failures -- Innovations to make microcredit a more powerful tool -- Other micro products and services to attack the problem -- Concluding remarks on motivation for research -- References

AbstractFor microfinance institutions (MFIs) with double bottom line objectives and trade‐offs, the optimal loan size can be determined by using a combination of Markovian Chains with transition probabilities and expected cash flows. Progressive lending may be safe over a range of loan sizes, beyond which a rational borrower would indulge in a strategic default. This range of safe loan sizes may depend on borrower characteristics (risk‐taking, self‐confidence, productivity, interest rates, subsistence needs) and the Microfinance Institution's strategy (financial inclusion objective, progressive lending). MFIs can improve the objective functions by better communication and encouragement of borrowers to increase their confidence in each stage and reassuring them that entrepreneurial failure will not mean being denied a second chance.