Sustainable Growth Rate - SGR
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Definition of '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)
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Investopedia explains 'Sustainable Growth Rate - SGR'
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.
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