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Sustainable Growth Rate Formula

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Sustainable Growth Rate represents the pace at which a company can expand its operations using internally generated funds, without relying on borrowing or issuing new equity. Check FAQs

SGR = RR \cdot ROE

SGR - Sustainable Growth Rate?RR - Retention Ratio?ROE - Return on Equity?

Sustainable Growth Rate Example

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Here is how the Sustainable Growth Rate equation looks like with Values.

Here is how the Sustainable Growth Rate equation looks like with Units.

Here is how the Sustainable Growth Rate equation looks like.

3.6 = 0.15 \cdot 24

3.6 = 0.15 \cdot 24

3.6 = 0.15 \cdot 24

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Sustainable Growth Rate Solution

Follow our step by step solution on how to calculate Sustainable Growth Rate?

FIRST Step Consider the formula

SGR = RR \cdot ROE

Next Step Substitute values of Variables

∴

SGR = 0.15 \cdot 24

Next Step Prepare to Evaluate

∴

SGR = 0.15 \cdot 24

LAST Step Evaluate

∴

SGR = 3.6

Sustainable Growth Rate Formula Elements

Variables

Sustainable Growth Rate

Sustainable Growth Rate represents the pace at which a company can expand its operations using internally generated funds, without relying on borrowing or issuing new equity.

Symbol: SGR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Sustainable Growth Rate

Retention Ratio

Retention Ratio indicates the percentage of profits that a company chooses to reinvest back into the business.

Symbol: RR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Retention Ratio

Return on Equity

Return on Equity indicates how efficiently a company is using its shareholders' equity to generate profits.

Symbol: ROE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Return on Equity

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Go Marshall-Edgeworth Price Index

MEI = \frac{LPI + PPI}{2}

Go Fisher Price Index

FPI = \sqrt{LPI \cdot PPI}

How to Evaluate Sustainable Growth Rate?

Sustainable Growth Rate evaluator uses Sustainable Growth Rate = Retention Ratio*Return on Equity to evaluate the Sustainable Growth Rate, The Sustainable Growth Rate (SGR) is a financial metric that measures the maximum rate at which a company can grow its sales revenue and earnings without requiring additional external financing, while maintaining a constant debt-to-equity ratio and dividend payout ratio. Sustainable Growth Rate is denoted by SGR symbol.

How to evaluate Sustainable Growth Rate using this online evaluator? To use this online evaluator for Sustainable Growth Rate, enter Retention Ratio (RR) & Return on Equity (ROE) and hit the calculate button.

FAQs on Sustainable Growth Rate

What is the formula to find Sustainable Growth Rate?

The formula of Sustainable Growth Rate is expressed as Sustainable Growth Rate = Retention Ratio*Return on Equity. Here is an example- 3.6 = 0.15*24.

How to calculate Sustainable Growth Rate?

With Retention Ratio (RR) & Return on Equity (ROE) we can find Sustainable Growth Rate using the formula - Sustainable Growth Rate = Retention Ratio*Return on Equity.

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Sustainable Growth Rate Formula

Sustainable Growth Rate Example

Sustainable Growth Rate Solution

Sustainable Growth Rate Formula Elements

Other formulas in Equity category

How to Evaluate Sustainable Growth Rate?

FAQs on Sustainable Growth Rate

Variable Name