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Sustainable Growth under Inflation
Robert C. Higgins
Vol. 10, No. 4 (Autumn, 1981), pp. 36-40
Stable URL: http://www.jstor.org/stable/3665217
Page Count: 5
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This companion paper to the Johnson paper points up some differences between the two authors, with this paper framing the question as: What impact does inflation have on real sustainable growth when leverage is measured in an economically meaningful way? In the presence of inflation, use of historical cost debt-to-equity ratios as measures of leverage is illogical. If managers and creditors understand inflation, they must conclude that uniform inflation has no effect on real sustainable growth.
Financial Management © 1981 Financial Management Association International