Internal Growth Rate

The internal growth rate (IGR) is the rate at which a company can grow its profits without taking on any new debt or equity. It is calculated by dividing the net income by the beginning-of-year shareholders' equity.

The IGR is an important metric for investors because it tells them how much a company can grow without having to resort to external financing. A high IGR indicates that a company is generating a lot of cash flow and is in a good financial position. A low IGR, on the other hand, can be a sign that a company is struggling to generate cash flow and may need to take on debt or equity to fund its growth.

The IGR can be used to compare different companies within the same industry or to track a company's growth over time. It can also be used to estimate a company's future earnings potential.

Here are some of the factors that can affect a company's IGR:

• The company's sales growth rate
• The company's profit margin
• The company's capital expenditures
• The company's debt level
• The company's tax rate

The IGR is a valuable tool for investors, but it is important to remember that it is only one of many factors that should be considered when evaluating a company.