Internal Growth Rate

Internal Growth Rate – The Internal growth rate of a company is an accounting formula that reveals the maximum growth a particular company can achieve without any outside financial support.  The equation used to determine the internal growth rate is:  retained earnings divided by the company’s total assets.  The retained earnings are a company’s net profits after shareholder dividends are disbursed.  Clearly, a company with a high IGR, would be a good investment for stock market speculators.  A company with little or no debt should get a high IGR, and lots of interest from investors.