## Sustainable Growth Measures

Self-Paced Overview

### Actual vs. Sustainable Growth

The return on equity, retention ratio and sustainable growth measures for the years in the previous example would be:

2013 | 2014 | 2015 | 2016 | 2017 | |
---|---|---|---|---|---|

ROA | 4.41% | 7.49% | 4.37% | 4.84% | 5.18% |

Retention Ratio | .5 | .6 | .667 | .714 | .74 |

Sustainable Growth | 2.2% | 4.49% | 2.92% | 3.46% | 3.84% |

If actual growth for the years in question is 5%, 5.2%, 5.1%, 5.3%, and 6.1%, then actual growth graphed against sustainable growth would appear as:

**Actual Growth vs. Sustainable Growth**

20132014201520162017

To calculate actual growth in sales, the analyst would find the percentage increase from one year to the next. For instance, if sales last year were $100,000 and $110,000 this year, then the actual growth rate in sales would be 10%.