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

**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.