Internal Growth Rate Calculator

Enter the retention plowback ratio and return on assets of a company into the calculator to determine the internal growth rate.

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?

  1. First, determine the return on assets.

    Calculate the total return on assets over a period of time.

  2. Next, determine the plowback ratio.

    Calculate the plowback ratio.

  3. Finally, calculate the internal growth rate.

    Calculate the internal growth rate using the formula above.

FAQ

What is an internal growth rate?

An internal growth rate is a business metric used to understand how a companies internal revenue is growing.

What is a plowback ratio?

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.

internal growth rate calculator
internal growth rate formula