Sustainable Growth Rate Calculator

✖Retention Ratio indicates the percentage of profits that a company chooses to reinvest back into the business.ⓘ Retention Ratio [RR]			+10% -10%
✖Return on Equity indicates how efficiently a company is using its shareholders' equity to generate profits.ⓘ Return on Equity [ROE]			+10% -10%

✖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.ⓘ Sustainable Growth Rate [SGR]

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Formula

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Sustainable Growth Rate

Formula

`"SGR" = "RR"*"ROE"`

Example

`"3.6"="0.15"*"24"`

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Sustainable Growth Rate Solution

STEP 0: Pre-Calculation Summary

Formula Used

Sustainable Growth Rate = Retention Ratio*Return on Equity
SGR = RR*ROE
This formula uses 3 Variables

Variables Used

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.
Retention Ratio - Retention Ratio indicates the percentage of profits that a company chooses to reinvest back into the business.
Return on Equity - Return on Equity indicates how efficiently a company is using its shareholders' equity to generate profits.

STEP 1: Convert Input(s) to Base Unit

Retention Ratio: 0.15 --> No Conversion Required
Return on Equity: 24 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

SGR = RR*ROE --> 0.15*24

Evaluating ... ...

SGR = 3.6

STEP 3: Convert Result to Output's Unit

3.6 --> No Conversion Required

FINAL ANSWER

3.6 <-- Sustainable Growth Rate

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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Satyawati College (DU), New Delhi

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Float-Adjusted Market Capitalisation Index

Go Float Adjusted Market Capitalisation = (Fraction of Shares Outstanding*Number of Shares Outstanding of Security*Price of the Security)/(sum(x,1,Number of Securities in the Index,(Fraction of Shares Outstanding*Number of Shares Outstanding of Security*Price of the Security)))

Market Capitalization Index

Go Market Capitalization = (Number of Shares Outstanding of Security*Price of the Security)/(sum(x,0,Number of Securities in the Index,(Number of Shares Outstanding of Security*Price of the Security)))

Laspeyres Price Index

Go Laspeyres Price Index = ((sum(x,1,2,(Price in Final Period*Quantity in Base Period)))/(sum(x,1,2,(Price in Base Period*Quantity in Base Period))))*100

Paasche Price Index

Go Paasche Price Index = ((sum(x,1,3,(Price in Final Period*Quantity in Final Period)))/(sum(x,1,3,(Price in Base Period*Quantity in Final Period))))*100

Altman's Z Score Model

Go Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales

Capital Allocation Line

Go Expected Return on Portfolio = ((Expected Return on Treasury Bill*Weight of Treasury Bill)+(Expected Return of Stock*Weight of Stock))*100

Justified Forward Price to Earnings Ratio

Go Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate)

Margin Call Price

Go Margin Call Price = Initial Purchase Price*((1-Initial Margin Requirement)/(1-Maintenance Margin Requirement))

Dividend Coverage Ratio

Go Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend

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Go Momentum Indicator = (Closing Price of Particular Stock/Closing Price of Stock N Days Ago)*100

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Dividend Growth Rate

Go Dividend Growth Rate = (Previous Year Dividend/Current Year Dividend)-1

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Go Price to Cash Flow Ratio = Current Share Price/Operating Cash Flow

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Sustainable Growth Rate

Go Sustainable Growth Rate = Retention Ratio*Return on Equity

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Equal Weighting

Go Equal Weighting = 1/Number of Securities in the Index

Sustainable Growth Rate Formula

Sustainable Growth Rate = Retention Ratio*Return on Equity
SGR = RR*ROE

What is Sustainable Growth Rate?

The Sustainable Growth Rate indicates the maximum rate at which a company can grow its earnings and dividends over the long term while maintaining a stable capital structure and financial health. If a company grows faster than its Sustainable Growth Rate, it may need to raise additional capital through debt or equity financing, which could dilute existing shareholders' ownership or increase financial leverage.

Investors use the Sustainable Growth Rate to evaluate a company's growth prospects and sustainability. A company with a Sustainable Growth Rate higher than its actual growth rate may have opportunities to reinvest earnings back into the business for further expansion, potentially creating value for shareholders over time. Conversely, a company with a Sustainable Growth Rate lower than its desired growth rate may need to explore alternative growth strategies or capital-raising options to achieve its objectives.

How to Calculate Sustainable Growth Rate?

Sustainable Growth Rate calculator uses Sustainable Growth Rate = Retention Ratio*Return on Equity to calculate 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 calculate Sustainable Growth Rate using this online calculator? To use this online calculator for Sustainable Growth Rate, enter Retention Ratio (RR) & Return on Equity (ROE) and hit the calculate button. Here is how the Sustainable Growth Rate calculation can be explained with given input values -> 3.6 = 0.15*24.

FAQ

What is 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 and is represented as SGR = RR*ROE or Sustainable Growth Rate = Retention Ratio*Return on Equity. Retention Ratio indicates the percentage of profits that a company chooses to reinvest back into the business & Return on Equity indicates how efficiently a company is using its shareholders' equity to generate profits.

How to calculate 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 is calculated using Sustainable Growth Rate = Retention Ratio*Return on Equity. To calculate Sustainable Growth Rate, you need Retention Ratio (RR) & Return on Equity (ROE). With our tool, you need to enter the respective value for Retention Ratio & Return on Equity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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