THE NUMORIX GUIDE
How to use the Sustainable Growth Rate Calculator
Last reviewed September 14, 2026
What this calculator does
The engine calculates ROE = net income / equity x 100 and retention ratio = (net income - dividends paid) / net income x 100.
Formula and method
The engine calculates ROE = net income / equity x 100 and retention ratio = (net income - dividends paid) / net income x 100. It then multiplies the decimal ROE and decimal retention ratio and converts the result back to a percent: SGR = ROE x retention ratio / 100.
Variables and inputs
Enter net income, shareholder equity, and dividends paid as dollar amounts for the same period. The view reports sustainable growth rate, ROE, and retention ratio. It does not ask for new debt, asset turnover, or an explicit growth horizon.
Worked example
With $100,000 net income, $800,000 equity, and $30,000 dividends, ROE is 100,000 / 800,000 x 100 = 12.5%. Retention is (100,000 - 30,000) / 100,000 x 100 = 70%, so SGR = 0.125 x 0.70 x 100 = 8.75%.
How to interpret the result
The result estimates growth a company could support by retaining earnings while holding ROE and payout behavior constant and not issuing new equity. It is a planning relationship, not a forecast of revenue or share price growth.
Common mistakes to avoid
Keep net income, dividends, and equity on compatible periods and definitions. Do not enter a dividend yield where total dividends paid are required. Check the sign when dividends exceed net income or when income is negative.
Assumptions and limitations
The route uses one equity value rather than average equity and assumes stable ROE, retention, asset efficiency, margins, and financing. It does not model new equity, debt capacity, buybacks, share count, industry cycles, or negative-income cases meaningfully; no input validation is present.