Sustainable Growth Rate

What is a Sustainable Growth Rate (SGR)?

A sustainable growth rate (SGR) is the highest amount of growth a business can have without accumulating further debt. To find your business SGR, fill out this formula:

Sustainable growth rate = return on equity x (1 - dividend payout ratio)

High SGRs are desirable for companies, as they point to high-margin products, maximized sales and good inventory management. However, it can be difficult for companies to maintain high SGRs over time without reaching saturation.