Free Sustainable Growth Rate (SGR) Calculator

Step 1: Revenue, Target Growth, Net Margin, Dividends, Turnover & Leverage

Higgins SGR & Capital Structure Parameters

📊 Top-Line Sales & Margin

Current Revenue ($)

Planned Sales Growth (%)

Net Profit Margin (%)

Dividend Payout Ratio (%)

⚖️ Balance Sheet Efficiency & Leverage

Asset Turnover (Sales/Assets)

Leverage Multiplier (Assets/Equity)

Higgins SGR Formula: SGR = (ROE × b) / (1 - (ROE × b)), where ROE = Profit Margin × Asset Turnover × Leverage Multiplier, and b = 1 - Dividend Payout %.

Sustainable Growth Rate (SGR)

31.2% SGR

Max growth with constant D/E ratio & zero new equity (Retention b = 100%)

Internal Growth Rate (IGR)

24.7% IGR

Max growth using only retained earnings (Zero new debt, Zero new equity)

DuPont Return on Equity

23.8% ROE

ROA: 19.8% (PM 18.0% x AT 1.10x x EM 1.20x)

Growth Capital Status

-3.8% Deficit

Moderate Capital Deficit (Planned 35.0% vs SGR 31.2%)

Self-Financing Matrix: SGR (%) vs. Retention Rate (b)

Simulates Higgins Sustainable Growth Rate (SGR %) and growth surplus / deficit gap across planned growth targets and earnings retention rates.

Target Growth Rate	20% Retention	40% Retention	60% Retention	80% Retention	100% Retention

Corporate Treasury Principles

Understanding SGR & Capital Strategy

Key corporate finance and self-financing principles:

The Self-Financing Constraint: Companies cannot grow faster than their SGR without either degrading their debt rating or diluting existing equity holders.
The Four Levers to Expand SGR: 1) Raise net profit margins, 2) Accelerate asset turnover, 3) Increase financial leverage, 4) Retain more earnings by cutting dividends.
The Growth Deficit Trap: Growing faster than SGR without raising capital burns cash, accelerates liquidity risk, and can cause profitable companies to enter technical bankruptcy.
SGR vs IGR: IGR uses zero new debt; SGR allows debt to grow at the same pace as equity to preserve the capital structure.

Analyze cost of capital in the WACC & Cost of Capital Lab.

Mathematical Formulation

Higgins SGR equations

Retention_Rate_b = 1 - Dividend_Payout_Ratio

DuPont_ROE = Net_Profit_Margin × Asset_Turnover × Leverage_Multiplier

DuPont_ROA = Net_Profit_Margin × Asset_Turnover

Higgins_SGR = ( ROE × b ) / [ 1 - ( ROE × b ) ]

Internal_Growth_Rate_IGR = ( ROA × b ) / [ 1 - ( ROA × b ) ]

Growth_Gap_% = Higgins_SGR_% - Planned_Growth_%

Model economic value in the Economic Value Added (EVA) Lab.

FAQ

Sustainable growth rate & corporate finance questions

What is the Sustainable Growth Rate (SGR) in corporate finance?

The Sustainable Growth Rate (SGR), formulated by Robert C. Higgins, is the maximum rate at which a company's sales can grow without issuing new equity, while maintaining its existing profit margin, dividend payout ratio, asset efficiency, and debt-to-equity leverage structure.

What is the difference between SGR and IGR (Internal Growth Rate)?

IGR is the maximum growth rate achievable using ONLY retained earnings (zero external debt and zero external equity). SGR allows proportional debt issuance to maintain a constant Debt/Equity ratio without issuing new equity shares.

What happens if a company's actual growth exceeds its SGR?

When planned growth exceeds SGR, the company experiences an External Financing Deficit. To avoid insolvency, it must raise new equity, take on more debt leverage, reduce dividends, improve profit margins, or increase asset turnover.

How does the Dividend Payout Ratio affect SGR?

Lower dividend payouts increase the earnings retention rate (b = 1 - Payout), which increases internal capital reinvestment and expands the sustainable growth rate.

Can I export the SGR self-financing audit and sensitivity matrix to CSV?

Yes. You can export complete DuPont ROE breakdowns, SGR/IGR formulas, growth gap audits, and 6x5 sensitivity tables as a UTF-8 CSV spreadsheet with formula defense.

Continue Exploring Corporate Strategy & Finance Tools

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