The internal growth rate (IGR) of a business is the highest level of growth achievable for the business without obtaining outside financing. The formula to calculate IGR is as follows:
Internal growth rate (IGR) = Retention Rate * Return on Assets
where retention rate is the percentage of earnings that a company reinvests and return on assets (ROA) is the ratio of annual net income to average total assets of a business during a financial year.
To find the internal growth rate (IGR) for a given business, simply enter the retention rate and return on assets in the boxes below and then click the “Calculate” button.