Table Table 1 Growth that compounds 6 September 2026

What does sustainable growth rate mean?

Term	Declaration	Failure when it is hidden
Return on equity	Net income divided by a named average equity base	Leverage, goodwill, or period changes move the ratio
Retention ratio	Share of earnings retained rather than paid out	A payout assumption is mistaken for operating growth
Payout ratio	Share of earnings distributed under the declared policy	Buybacks, special dividends, or loss periods change the numerator
Sustainable growth rate	ROE multiplied by retention under the identity	A conditional capacity becomes a forecast or target
Financing boundary	Debt, equity, cash, asset productivity, and leverage assumptions	External financing is hidden when the target exceeds the identity

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Source: Table from this essay. Sources and interpretation are given in the article.

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What is sustainable growth rate? Growth has a financing boundary

Sustainable growth rate is a conditional financing identity, commonly ROE times retention. State capital, payout, leverage, and assumptions before use.

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Isoglu, S. (2026). What does sustainable growth rate mean? [Table]. isoglu.com. https://isoglu.com/insights/exhibits/isoglu-2026-what-is-sustainable-growth-rate-fig01/

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@misc{isoglu-2026-what-is-sustainable-growth-rate-fig01,
  author = {Isoglu, Sinan},
  title = {{What does sustainable growth rate mean?}},
  year = {2026},
  howpublished = {Table 1, isoglu.com},
  url = {https://isoglu.com/insights/exhibits/isoglu-2026-what-is-sustainable-growth-rate-fig01/},
  note = {From the essay {What is sustainable growth rate? Growth has a financing boundary}}
}

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