Resource-based Enterprises Grow Too Fast?——Evaluation and Test of Sustainable Growth Theory

This paper takes four resource-based enterprises, including Baotou Steel Rare-earth and Xishan Coal Electricity Group, as examples. We establish a theoretical framework, using traditional sustainable growth theory to evaluate and test the findings. Results show that the actual growth rate of the resource-based business has been higher than the sustainable growth rate over the past 10 years. This paper analyzes the sample companies by using the financial leverage level test, Z score model checking and economic added value test, and finds that they did not encounter financial resource constraints or financial crisis, and their enterprise value was not impaired. This means the traditional sustainable growth theory cannot explain whether resource-based enterprises can growth sustainably. We make a further analysis of its causes, and combine with the actual resource-based enterprises’ financial situation, put forward policy recommendations for sustainable growth.