Find the growth rate a company can fund without raising new equity.
Please do not make financial decisions based on these results.
What is the Sustainable Growth Rate Calculator?
Find the growth rate a company can fund without raising new equity. To use the Sustainable Growth Rate Calculator, enter roe, retention ratio; it returns sustainable growth rate, simple version (roe × retention), and shows them instantly as you type.
Where the Sustainable Growth Rate Calculator fits
Find the growth rate a company can fund without raising new equity. The main figure it returns is the Sustainable growth rate, worked out from the values you enter.
It belongs with the other stocks & equity analysis tools. If you are comparing options or checking a result from another angle, try the Earnings Per Share Growth Calculator, Cost of Equity Calculator or the CAPM Calculator – Capital Asset Pricing Model.
How to use the Sustainable Growth Rate Calculator
- Enter your numbers. Start with ROE (%), Retention ratio (%). Take price and share figures from the latest filing or quote. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Sustainable growth rate, and the cards below show Simple version (ROE × retention). Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Sustainable Growth Rate Calculator using the default values shown in the calculator above:
Inputs
| ROE (%) | 15 |
|---|---|
| Retention ratio (%) | 60 |
Results
| Sustainable growth rate | 9.89% |
|---|---|
| Simple version (ROE × retention) | 9% |
With these inputs the calculator returns Sustainable growth rate: 9.89%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising ROE (%) from 15 to 18 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Sustainable growth rate | 9.89% | 12.11% | +22.4% |
| Simple version (ROE × retention) | 9% | 10.8% | +20% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Sustainable Growth Rate Calculator reports Sustainable growth rate and simple version (roe × retention). Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
What is the sustainable growth rate?
The maximum growth in sales a firm can finance from retained earnings and fixed leverage.
Are valuation results investment advice?
No. They are model outputs from the figures you enter. Test a range of assumptions and speak with a licensed adviser before investing.
Where do I find the inputs?
Company filings (10-K and 10-Q), investor relations pages and your broker show earnings, equity, debt and share counts.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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