The sustainable growth rate (SGR) can be determined by the following formula: SGR = ROE × (1 - Dividend payout ratio) In this equation, ROE refers to the return on equity, which measures the income the company receives from potential shareholders. . Justice. For example, dividends represent the percentage of income distributed as dividends. For example, if a company has an ROE of 15% and a dividend yield of 40%, the resulting SGR will be 9%. This figure shows that the company can maintain its financial health and stability by growing 9% per year without the need for external financing.