The Internal Growth Rate (IGR) is the maximum rate at which a company can grow its assets or operations using only its internal resources, without needing external financing such as issuing new equity or taking on additional debt.

It reflects how efficiently a company can reinvest its profits to fund future growth, based on two key factors:

Return on Assets (ROA) – how effectively the company uses its assets to generate profit.

Plowback Ratio – the portion of earnings retained and reinvested back into the business.

A higher internal growth rate indicates stronger self-sufficiency and the ability to expand using retained earnings alone.

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