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Sustainable Growth Rate Calculator — result sheet
Estimate a stable-policy growth rate from return on equity and the share of earnings retained in the business.
Inputs used
Results
Visual chart
Breakdown
Calculation steps
Returned data table
Formula and methodology
Formula: Sustainable growth rate = return on equity × retention ratio; retention ratio = 1 − dividend payout ratio.
This stable-policy model links growth to the return earned on equity and the proportion of earnings kept for reinvestment. It reports retention separately because the same ROE can produce different growth estimates when the payout policy changes.
This result follows the calculator's declared inputs, precision, validation boundaries, and model limits.
Input contract
- Return on equity — %; minimum -100; maximum 1000
- Dividend payout ratio — %; minimum 0; maximum 100
Worked example
| Input | Value |
|---|---|
| Return on equity | 15 |
| Dividend payout ratio | 40 |
Retention is 60% and the sustainable growth estimate is 9%.
Assumptions and limits
- Return on equity and payout ratio describe the same company, period, and accounting definitions.
- The payout ratio is between 0% and 100%, so retention is calculated as the remaining share.
- The result is a scenario estimate that assumes the return and payout policy persist; it is not a company forecast or valuation conclusion.
Calculator note
Source and methodology
Use the official WorldCalculate methodology policy for the source, formula, precision, and boundary standards behind this calculator.
Planning estimate, not financial, medical, legal, or professional advice. © WorldCalculate — reuse with attribution. Built and curated by Hassan ALRowaie.
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