Internal Growth Rate (IGR)
The Internal Growth Rate (IGR) is the maximum rate at which a company can grow its revenue using only its retained earnings, without raising any external financing (neither debt nor equity).
The formula is as follows:
\[\text{Return on Assets} = \text{Net Income} / \text{Total Assets at the end of the period}\] \[\text{Retention Ratio} = 1 - \text{Dividend Payout Ratio}\] \[\text{IGR} = (\text{Return on Assets} \cdot \text{Retention Ratio}) / (1 - (\text{Return on Assets} \cdot \text{Retention Ratio}))\]Also known as: IGR.
Internal Growth Rate (IGR) in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_internal_growth_rate as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["ADBE", "INTU", "ADSK"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.models.get_internal_growth_rate()
Or, after setting up the Finance Toolkit MCP, ask:
How fast could Adobe, Intuit and Autodesk have grown without outside financing from 2021 to 2025, measured by the internal growth rate?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| ADBE | 0.2151 | 0.2122 | 0.2229 | 0.2254 | 0.3188 |
| ADSK | 0.0613 | 0.0955 | 0.1006 | 0.1144 | 0.0991 |
| INTU | 0.1004 | 0.0489 | 0.0569 | 0.0639 | 0.0782 |
Parameters
get_internal_growth_rate accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | The number of decimals to round the results to. Defaults to None. | 2 |
growth | bool | Whether to calculate the growth of the values. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | None | The trailing period to use for the calculation. Defaults to None. | 4 |