Internal Growth Rate Calculator

Internal growth rate refers to the highest level of business growth rate from a company without using any additional finance from outside. Maximum internal growth is the total level of business growth required to fund and grow the company. It helps small scale business owners and new firms to grow their business without issuing more stock or debt. Use our online internal growth rate calculator to find the maximum growth rate of the firm by providing the return on asset and retention ratio.

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Internal growth rate refers to the highest level of business growth rate from a company without using any additional finance from outside. Maximum internal growth is the total level of business growth required to fund and grow the company. It helps small scale business owners and new firms to grow their business without issuing more stock or debt. Use our online internal growth rate calculator to find the maximum growth rate of the firm by providing the return on asset and retention ratio.

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Formula:

Internal Growth Rate = ((ROA × r) / (1 - (ROA × r))) × 100 Where, ROA = Return on Asset r = Retention Ratio

Example:

Calculate the maximim growth rate of the firm if the return on asset is 0.1263 and the retention ratio is 0.50?

Solution:

Internal =((0.1263×0.50)/(1-(0.1263×0.50)))×100
= 6.7407%


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