Enter the retention plowback ratio and return on assets of a company into the calculator to determine the internal growth rate.
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Internal Growth Rate Formula
The following formula can be used to calculate an internal growth rate of a business.
IGR = ROA * b / (1- ROA * b)
- Where IGR is the internal growth rate
- ROA is the return on assets
- b is the plowback ratio
Internal Growth Rate Definition
An internal growth rate is a measure of the change in internal revenue over time with respect to the assets of a company.
Internal Growth Rate Example
How to calculate internal growth rate?
- First, determine the return on assets.
Calculate the total return on assets over a period of time.
- Next, determine the plowback ratio.
Calculate the plowback ratio.
- Finally, calculate the internal growth rate.
Calculate the internal growth rate using the formula above.
FAQ
An internal growth rate is a business metric used to understand how a companies internal revenue is growing.
A plowback ratio is a ratio that measures amount of earnings that are retained by a company after it has paid out dividends to shareholders.

