What is the internal growth rate formula
Internal Growth Rate Calculator. More about this Internal growth rate calculator so you can better understand how to use this solver: The Internal growth rate of a firm depends on the retention (plowback) ratio \((RR)\) and the return on assets \((ROA)\) using the following growth rate formula: Video Explanation of Internal Rate of Return (IRR) Below is a short video explanation with an example of how to use the XIRR function in Excel to calculate the internal rate of return of an investment. The demonstration shows how the IRR is equal to the compound annual growth rate (CAGR). CAGR CAGR stands for the Compound Annual Growth Rate. It We define a firm's external finance dependence (EFD) as the difference in the actual growth rate and the internal growth rate.A positive value of EFD for a given year suggests a firm was dependent on external financing to fund asset growth for that year.