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Sustainable Growth Rate Calculator
Find the fastest a company can grow revenue using only retained earnings — no new debt, no new shares. Enter any ticker for live ROE and payout data, or run the numbers manually. Includes a full ROE × retention sensitivity table and a financing-gap verdict.
Enter a ticker to calculate the Sustainable Growth Rate
Try KO, PG, or any dividend-paying company. The calculator pulls live ROE and payout data and computes the fastest revenue growth the business can fund without raising external capital.
SGR sensitivity table
Sustainable growth rate at each combination of ROE (rows) and retention ratio (columns). Find where your company sits — higher ROE and higher retention both lift the ceiling.
| ROE ↓ / Retention → | 20% | 40% | 60% | 80% | 100% |
|---|---|---|---|---|---|
| 5% | 1.0% | 2.0% | 3.0% | 4.0% | 5.0% |
| 10% | 2.0% | 4.0% | 6.0% | 8.0% | 10.0% |
| 15% | 3.0% | 6.0% | 9.0% | 12.0% | 15.0% |
| 20% | 4.0% | 8.0% | 12.0% | 16.0% | 20.0% |
| 25% | 5.0% | 10.0% | 15.0% | 20.0% | 25.0% |
RELATED TOOLS
ROE calculator — the first term in the formula →Dividend payout ratio calculator →Learn how returns on capital compound in the ROIC guide.
What Is the Sustainable Growth Rate?
The sustainable growth rate (SGR) is the maximum pace at which a company can grow its revenue and earnings without raising external capital — relying only on the profit it keeps after paying dividends. It is the growth a business funds entirely from its own returns:
| Formula | What it captures |
|---|---|
| ROE × (1 − Dividend Payout Ratio) | The growth funded by retained earnings alone — return on equity multiplied by the share of profit kept in the business |
A company earning a 15% return on equity that pays out 30% of profit as dividends retains 70% of it. Its sustainable growth rate is 15% × 0.70 = 10.5%. Grow faster than that and the company must borrow or issue shares; grow slower and it accumulates surplus capital to return to shareholders.
How to Interpret Your SGR
| Actual growth vs. SGR | What it means |
|---|---|
| Growth < SGR | Self-funded with room to spare — the business generates more capital than it reinvests, typically returned via dividends or buybacks |
| Growth ≈ SGR | Balanced — growth is fully financed by retained earnings, no external capital required |
| Growth > SGR | External financing required — the gap must be funded by new debt or equity, or ROE must rise and payout must fall |
How the SGR Calculator Works
The two levers
Only two things move the sustainable growth rate: return on equity and the retention ratio. A company can lift its internally-fundable growth by earning more on each dollar of equity, or by keeping more of its profit instead of paying it out.
Why the financing gap matters
When a company's revenue growth outruns its SGR year after year, the balance sheet has to absorb the difference — rising debt or repeated share issuance. The financing gap is an early warning that a growth story depends on outside capital.
Watch for leverage-inflated ROE
ROE can be pumped up by debt through the equity multiplier, which flatters the SGR. Pair this with the ROE calculator and a look at ROIC to see whether the returns are real or borrowed.
The payout side
The retention ratio is simply one minus the dividend payout ratio. A high payout leaves little to reinvest and caps growth; a low payout frees capital but only creates value if reinvested above the cost of capital. Check the payout ratio calculator.
How to Use This Calculator
Enter a ticker or go manual
Type any US-listed ticker to fetch live ROE and dividend payout, or switch to Manual input to enter your own ROE and payout ratio.
Read the sustainable rate
The result shows the SGR with a full formula breakdown — ROE, payout, retention — plus the current price in ticker mode.
Check the financing gap
Compare the SGR to trailing revenue growth — or enter your own growth target — to see whether the plan is self-funded or needs external capital.
Use the sensitivity table
Scan the ROE × retention matrix to see how the sustainable rate shifts as either lever moves — and where your company sits today.
Frequently Asked Questions
What is the difference between SGR and the internal growth rate?
The internal growth rate (IGR) uses return on assets and retention (ROA × retention ÷ (1 − ROA × retention)) and assumes no new debt at all. The sustainable growth rate uses return on equity and allows the company to add debt proportionally to keep its leverage constant. SGR is therefore higher than IGR and is the more common benchmark.
Can the sustainable growth rate be negative?
Yes. If a company has a negative return on equity — because it is losing money — its sustainable growth rate is negative, meaning the equity base is shrinking. A negative SGR signals a business that is contracting rather than compounding.
Does a payout ratio above 100% break the formula?
A payout ratio above 100% means the company is paying more in dividends than it earns, giving a negative retention ratio and a negative SGR. That dividend is being funded from cash reserves or borrowing, not earnings — a red flag for dividend sustainability.
How often does the live data update?
ROE and payout ratio are pulled from Yahoo Finance on a trailing-twelve-month basis and refresh through the day. Use the as-of date shown in the result to confirm the reporting window.
Why might SGR differ from a company's actual long-run growth?
SGR is a steady-state model that holds ROE and payout constant and assumes constant leverage. Real companies change their margins, capital efficiency, and dividend policy over time, and can grow above SGR for years by raising capital. Treat SGR as a benchmark, not a forecast.
Is SGR useful for high-growth or non-dividend companies?
For a company that pays no dividend, the retention ratio is 100% and SGR simply equals ROE. That is the ceiling on growth it can fund internally. Fast-growing firms often blow past it by issuing equity — which is exactly what the financing-gap analysis surfaces.
FINISHED THE NUMBERS?
A calculator gives you one number. The report gives you the argument.
Assumptions, scenarios, and what breaks them — on any public company.
See a sample report →