Sustainable growth rate
Find the fastest a company can grow using only retained profit, then compare it to how fast the company is actually growing — the gap tells you whether the growth is self-funded or bought with outside capital.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Return on equity
How productively the company earns on shareholders’ money. Retained profit adds to equity, so a higher ROE means each retained rupee compounds faster.
- Dividend payout
The share of profit paid out as dividends. Whatever is not paid out is retained — and retention is the fuel for self-funded growth.
- Read the sustainable rate
Sustainable growth = ROE × (1 − payout). It is the ceiling for growth funded from profit alone, holding leverage steady.
- Compare to actual growth
Enter how fast the company is really growing. Above the sustainable rate, the difference is being funded by dilution, debt or a rising ROE; below it, the firm throws off more capital than it reinvests.
Worked example: A 20% grower with a 15% ceiling
A company earns a 20% return on equity, pays out a quarter of its profit, and is growing sales at 20% a year. Is that growth self-funded?
What to enter
- Return on equity
- 20%
- Dividend payout
- 25%
- Actual growth
- 20%
What it shows you
- Retention ratio
- 75%
- Sustainable growth rate
- 15%
- Actual − sustainable
- +5 pts
1 − 0.25
20% × 0.75
funded from outside
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Fundamental Analysis8 minThe sustainable growth rate: how fast a company can grow on its own moneyThere is a speed limit on how fast a company can grow while funding itself from profits alone. The sustainable growth rate names it — and comparing it to how fast a firm actually grows tells you whether it is quietly borrowing or diluting to keep up.
- Risk & Psychology11 minBorrowed money, and why it changes the arithmeticLeverage multiplies the outcome without improving your accuracy, and it hands somebody else the right to decide when you exit.
- Fundamental Analysis10 minDilution: the cost that never appears as an expenseShare count is the denominator of everything. How ESOPs, QIPs and warrants quietly transfer value away from you.
- Market Basics12 minFutures and options, explained honestlyWhat derivatives are, why they exist, how leverage actually works — and the SEBI data on what happens to retail traders who use them.
- Market Basics12 minMargin, pledging and the real cost of leverageMTF, pledging your holdings and intraday leverage all rent you money. What that rent actually costs, and why the same 10% fall behaves completely differently once you have borrowed.