1. What is Self Supporting Growth Rate?

The Self Supporting Growth Rate (SSGR) is the maximum growth rate a company can achieve without external financing while maintaining its current financial structure. It's determined by the company's return on assets (ROA) and retention ratio.

2. How Does the Calculator Work?

The calculator uses the SSGR formula:

Where:

• \( ROA \) — Return on Assets (as decimal, e.g. 0.15 for 15%)
• \( Retention \) — Retention rate (as decimal, e.g. 0.60 for 60%)

Explanation: The equation shows how much a company can grow using only its internally generated funds, based on profitability (ROA) and how much earnings are retained rather than paid out.

3. Importance of SSGR Calculation

Details: SSGR helps companies plan sustainable growth strategies, assess financing needs, and understand their organic growth potential without relying on external capital.

4. Using the Calculator

Tips: Enter ROA and retention rate as decimals (e.g., 0.15 for 15%). Both values must be between 0 and 1, and their product must be less than 1.

5. Frequently Asked Questions (FAQ)

Q1: What's a good SSGR?
A: This varies by industry. Higher SSGR indicates greater capacity for self-funded growth. Compare with industry benchmarks.

Q2: How is retention rate calculated?
A: Retention rate = 1 - Dividend payout ratio. If a company pays 30% of earnings as dividends, retention is 70%.

Q3: What if ROA × Retention ≥ 1?
A: The formula becomes undefined. In practice, this means the company could theoretically grow indefinitely without external financing.

Q4: How does this differ from sustainable growth rate?
A: SSGR focuses on assets, while sustainable growth rate typically uses return on equity (ROE). Both measure internal growth capacity.

Q5: Can SSGR be negative?
A: Yes, if ROA is negative (company is losing money), SSGR will be negative, indicating the company is contracting.