After a period of cutting costs and improving controls in response to the dot-com bust, 9/11, and various corporate scandals, CEOs are increasingly focused on generating growth. But do companies have the requisite financial capacity?

To answer this question, the sustainable growth rates across industries in the U.S. were analyzed in order to determine how well the operating performance and financial policies of firms are aligned with their anticipated growth. A company's sustainable growth rate, or SGR, is the maximum pace at which a company can grow revenue without depleting its financial resources.

The aggregate results are significant: the sustainable growth rates for the S&P 500 (based on 2004 calendar year data) exceed the forward 3-year compounded annual growth in revenue. This suggests that, on average, S&P 500 companies can continue to expand without new equity issuance

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