Sustainable Growth Rate Calculator

Your details

Net income attributable to common shareholders for the period (from the income statement).
USD
Total cash dividends distributed to shareholders during the period. Enter 0 if the company pays no dividends.
USD
Book value of shareholders' equity at the start of the period (or average if available) from the balance sheet.
USD
Total assets at the same date as shareholders' equity. Used to calculate the equity multiplier and return on assets.
USD
Total revenue for the period. When provided, the calculator shows profit margin and asset turnover as part of the DuPont breakdown.
USD
Number of years to project compound growth in the chart below.
years
Sustainable Growth RateModerate growth capacity
14%

The maximum rate the company can grow using retained earnings alone, without changing its leverage or issuing new equity.

Internal Growth Rate8.75%
Retention Ratio70%
Return on Equity (ROE)20%
Return on Assets (ROA)12.5%
Equity Multiplier1.6
Net Profit Margin10%
Asset Turnover1.25
14% %
Low<5Moderate5-15High15-25Very High25+

Sustainable growth rate: 14.00% per year

  • The company can grow at up to 14.00% per year while maintaining its current capital structure (debt-to-equity ratio and profit margins).
  • Without any new external financing (no new debt or equity), the internal growth rate is 8.75%. The 5.25 percentage-point gap reflects the leverage benefit from existing debt.
  • The company pays out 30.0% of earnings as dividends and retains 70.0%. Reducing dividends would increase the retention ratio and raise the SGR.
  • ROE is 20.00% and ROA is 12.50%. A higher ROE relative to ROA signals significant financial leverage, which amplifies growth potential but also risk.

Next stepIf the business plans to grow faster than the SGR, it will need external financing. Compare the SGR to your target growth rate to estimate the funding gap.

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