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Sustainable Growth Rate

Find the maximum growth rate a business can sustain using only retained earnings without taking on additional debt or issuing equity.

Growth Details

Net Income ($)

Total Equity ($)

Dividends Paid ($)

Results

Sustainable Growth Rate

Return on Equity

Retention Ratio

The sustainable growth rate represents the maximum rate at which the company can grow using only retained earnings, without needing external financing or changing its financial leverage.

Formula

SGR = ROE x (1 - Dividend Payout Ratio)

Where:

ROE = Net Income / Total Equity

Dividend Payout Ratio = Dividends / Net Income

Retention Ratio = 1 - Dividend Payout Ratio

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