Sustainable Growth Rate (SGR)
The maximum growth rate that a firm can sustain without having to increase financial leverage.
Calculated as:
ROE x (1 - dividend-payout ratio) Investopedia Says:
The sustainable growth rate is a measure of how much a firm can grow without borrowing more money. After the firm has passed this rate, it must borrow funds from another source to facilitate growth. Related Terms:
Dividend Payout Ratio
Leverage
ROE |