Sustainable Growth Rate Calculator

About this calculator

The sustainable growth rate (SGR = ROE × retention ratio) estimates the fastest a company can grow its revenue using only internally generated equity, without issuing new shares or taking on additional debt beyond what current profitability supports. The retention ratio (1 − dividend payout ratio) is the share of earnings reinvested rather than paid out, so a highly profitable company that retains most of its earnings can sustain much faster growth than one that pays large dividends.

Equity research analysts use SGR as a sanity check on a company's growth forecasts — if a firm is growing well beyond its SGR, it's relying on new financing, which changes the risk picture — while corporate finance teams use it internally to plan how much growth is achievable before needing external capital. It's a standard metric alongside ROE and payout ratio in fundamental analysis and financial modelling.