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What’s your opinion about Top line & Bottom line growth of an organization?

Do you think organization that provides good top line growth always gives good total return to shareholder (TRS) or the organization which perform poorly in terms of both top line & bottom line growth doesn’t provides good return to shareholders or the organization which provides good bottom line growth however lacks in top line growth can deploy good TRS for a long period of time.

If you think yes then you are wrong. Top Line & Bottom Line growth are always a good indicator of high return to shareholder but this is not always true, there are certain number of companies that were not rewarded in terms of Total returns to shareholders (TRS) in spite of giving robust revenue & profit.

Survey conducted by a reputed company for US economic cycle of 1984-1993 shows that 20% companies in spite of being providing faster revenue growth than the median, could not generate good total returns to shareholders (TRS) however there are other 20% companies whose revenue growth were very slow but they have provided excellent........

Please visit my blog URL to read the complete article.......

http://deepakagrawalblog.wordpress.com/2010/02/23/myth-about-top-line-bottom-line-growth/

 
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3 comments on "Myth about Top Line & Bottom Line Growth "
  Commented by  Makrand Bhave, Marketing & MICE, WIZCRAFT International    | 02 23 2010 12:00:23 +0000
Deepak extremely interesting. From what little I understand in terms of Top line and Bottom line, TRS would entirely depend on the plans of expansion or progress or capital investments that the company plans in the forthcoming years. There is always a plan for growth in the company's revenue management programme for shareholders to know where the money that they have invested in is going to. 

So I believe that a healthy top or bottom line does not necessarily indicate a healthy TRS but at the same time it may denote exactly the opposite and that purely like I understand would depend on planned investments of the company. Its a very interesting insight and i am glad for the referral. i am a little more knowledgeable today, thank you Deepak!! :)
  Commented by  RAMESH KANDADAI, Principal Consultant, ARM Consultants    | 02 23 2010 09:16:02 +0000
just got done going through the blog. Very interesting and informative. Thanks.
  Commented by  RAMESH KANDADAI, Principal Consultant, ARM Consultants    | 02 23 2010 09:13:06 +0000
Deepak, Thanks for the referral. When a company generates good revenue, it is a question of what they do with the revenue, is it not? They can plow it back in to the business - consequently showing less returns - or show healthier returns and have less to develop the business. One would assume that it is very difficult to achieve both. Needless to say, mine is a simplistic view...
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