Login
Welcome Guest! To enable all features please Login. New Registrations are disabled.

Notification

Icon
Error
How is the Implied Growth Rate calculated in Toolkit 6?
Options
Go to last post Go to first unread
Previous Topic Next Topic
jgtr  
#1 Posted : Friday, October 9, 2009 6:07:34 AM(UTC)
jgtr

Rank: Advanced Member

Posts: 63

How is the Implied EPS growth calculated as shown in the link on the front of the SSG? It is one of several numbers displayed for selecting a future growth rate.
Back to top

Wanna join the discussion?! Login to your forum account. New Registrations are disabled.
Back to top  
jimthomas@yahoo.com  
#2 Posted : Friday, October 9, 2009 11:08:18 AM(UTC)
jimthomas@yahoo.com

Rank: Advanced Member

Posts: 105

Visit http://www.bivio.com/pugetsoundbi/files/Toolkit/TK4HotKeys.html and look for Alt+S in the left column. That has the formula used by Toolkit versions 4, 5 and 6.

The formula is ( 100% - Avg%Payout ) x AvgROE but read the link above for the details.
Back to top
arminfields  
#3 Posted : Friday, October 9, 2009 1:07:42 PM(UTC)
arminfields

Rank: Advanced Member

Posts: 271

 

Hey Jeff:

I searched the TK 6 manual and quickly found (at page 234) the following explanation:

Implied Growth = % Return On Equity x (1 - Dividend Payout Ratio)

 

From the Stock Study, Toolkit uses the 5-Year Average Return on Equity from Section 2B, and the 5-Year Average Dividend Payout

Ratio from Section 3 for this calculation.

 

For companies that pay no dividends, the Implied Growth Rate will be equal to the Return on Equity. >>

 

Armin

 

 


Back to top
jimthomas@yahoo.com  
#4 Posted : Friday, October 9, 2009 5:24:11 PM(UTC)
jimthomas@yahoo.com

Rank: Advanced Member

Posts: 105
> ... and the 5-Year Average Dividend Payout Ratio from Section 3 for this calculation.
That part is incorrect. Toolkit 6 (and 5 and 4) uses the 5-Year Average Dividend Payout Ratio from section 5. The value in section 5 is a judgment item and may be different from the value in section 3.




Back to top
jgtr  
#5 Posted : Saturday, October 10, 2009 5:53:34 AM(UTC)
jgtr

Rank: Advanced Member

Posts: 63
Thanks for the help. The tutorial from NAIC on line was excellent.
Back to top
gerlach  
#6 Posted : Tuesday, October 13, 2009 6:05:13 AM(UTC)
gerlach

Rank: Administration

Posts: 437

Thanks: 7 times
Was thanked: 14 time(s) in 10 post(s)

The manual was updated for the version 6.2 release in June 2009 (you can download the current PDF from http://www.iclub.com/toolkit6/tips/).

Here's what it says in this version of the manual, on pages 234-235:










Normal
0




false
false
false

EN-US
X-NONE
X-NONE


























DefSemiHidden="true" DefQFormat="false" DefPriority="99"
LatentStyleCount="267"> UnhideWhenUsed="false" QFormat="true" Name="Normal" /> UnhideWhenUsed="false" QFormat="true" Name="heading 1" />

















UnhideWhenUsed="false" QFormat="true" Name="Title" />
UnhideWhenUsed="false" QFormat="true" Name="Subtitle" /> UnhideWhenUsed="false" QFormat="true" Name="Strong" /> UnhideWhenUsed="false" QFormat="true" Name="Emphasis" /> UnhideWhenUsed="false" Name="Table Grid" />
UnhideWhenUsed="false" QFormat="true" Name="No Spacing" /> UnhideWhenUsed="false" Name="Light Shading" /> UnhideWhenUsed="false" Name="Light List" /> UnhideWhenUsed="false" Name="Light Grid" /> UnhideWhenUsed="false" Name="Medium Shading 1" /> UnhideWhenUsed="false" Name="Medium Shading 2" /> UnhideWhenUsed="false" Name="Medium List 1" /> UnhideWhenUsed="false" Name="Medium List 2" /> UnhideWhenUsed="false" Name="Medium Grid 1" /> UnhideWhenUsed="false" Name="Medium Grid 2" /> UnhideWhenUsed="false" Name="Medium Grid 3" /> UnhideWhenUsed="false" Name="Dark List" /> UnhideWhenUsed="false" Name="Colorful Shading" /> UnhideWhenUsed="false" Name="Colorful List" /> UnhideWhenUsed="false" Name="Colorful Grid" /> UnhideWhenUsed="false" Name="Light Shading Accent 1" /> UnhideWhenUsed="false" Name="Light List Accent 1" /> UnhideWhenUsed="false" Name="Light Grid Accent 1" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 1" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 1" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 1" />
UnhideWhenUsed="false" QFormat="true" Name="List Paragraph" /> UnhideWhenUsed="false" QFormat="true" Name="Quote" /> UnhideWhenUsed="false" QFormat="true" Name="Intense Quote" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 1" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 1" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 1" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 1" /> UnhideWhenUsed="false" Name="Dark List Accent 1" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 1" /> UnhideWhenUsed="false" Name="Colorful List Accent 1" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 1" /> UnhideWhenUsed="false" Name="Light Shading Accent 2" /> UnhideWhenUsed="false" Name="Light List Accent 2" /> UnhideWhenUsed="false" Name="Light Grid Accent 2" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 2" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 2" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 2" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 2" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 2" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 2" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 2" /> UnhideWhenUsed="false" Name="Dark List Accent 2" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 2" /> UnhideWhenUsed="false" Name="Colorful List Accent 2" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 2" /> UnhideWhenUsed="false" Name="Light Shading Accent 3" /> UnhideWhenUsed="false" Name="Light List Accent 3" /> UnhideWhenUsed="false" Name="Light Grid Accent 3" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 3" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 3" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 3" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 3" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 3" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 3" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 3" /> UnhideWhenUsed="false" Name="Dark List Accent 3" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 3" /> UnhideWhenUsed="false" Name="Colorful List Accent 3" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 3" /> UnhideWhenUsed="false" Name="Light Shading Accent 4" /> UnhideWhenUsed="false" Name="Light List Accent 4" /> UnhideWhenUsed="false" Name="Light Grid Accent 4" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 4" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 4" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 4" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 4" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 4" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 4" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 4" /> UnhideWhenUsed="false" Name="Dark List Accent 4" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 4" /> UnhideWhenUsed="false" Name="Colorful List Accent 4" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 4" /> UnhideWhenUsed="false" Name="Light Shading Accent 5" /> UnhideWhenUsed="false" Name="Light List Accent 5" /> UnhideWhenUsed="false" Name="Light Grid Accent 5" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 5" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 5" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 5" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 5" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 5" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 5" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 5" /> UnhideWhenUsed="false" Name="Dark List Accent 5" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 5" /> UnhideWhenUsed="false" Name="Colorful List Accent 5" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 5" /> UnhideWhenUsed="false" Name="Light Shading Accent 6" /> UnhideWhenUsed="false" Name="Light List Accent 6" /> UnhideWhenUsed="false" Name="Light Grid Accent 6" /> UnhideWhenUsed="false" Name="Medium Shading 1 Accent 6" /> UnhideWhenUsed="false" Name="Medium Shading 2 Accent 6" /> UnhideWhenUsed="false" Name="Medium List 1 Accent 6" /> UnhideWhenUsed="false" Name="Medium List 2 Accent 6" /> UnhideWhenUsed="false" Name="Medium Grid 1 Accent 6" /> UnhideWhenUsed="false" Name="Medium Grid 2 Accent 6" /> UnhideWhenUsed="false" Name="Medium Grid 3 Accent 6" /> UnhideWhenUsed="false" Name="Dark List Accent 6" /> UnhideWhenUsed="false" Name="Colorful Shading Accent 6" /> UnhideWhenUsed="false" Name="Colorful List Accent 6" /> UnhideWhenUsed="false" Name="Colorful Grid Accent 6" /> UnhideWhenUsed="false" QFormat="true" Name="Subtle Emphasis" /> UnhideWhenUsed="false" QFormat="true" Name="Intense Emphasis" /> UnhideWhenUsed="false" QFormat="true" Name="Subtle Reference" /> UnhideWhenUsed="false" QFormat="true" Name="Intense Reference" /> UnhideWhenUsed="false" QFormat="true" Name="Book Title" />






/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:"Times New Roman";
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:"Times New Roman";
mso-bidi-theme-font:minor-bidi;}

The Implied EPS Growth Rate is calculated by the program. This figure is sometimes known as the Sustainable Growth, % Retained Earnings to Common Equity, Plowback Ratio, Implicit Growth, or Internal Growth.

This rate is a theoretical limit on the growth that can be expected by a company based on the usage of its existing assets (that is, without borrowing). This value provides a quick check when selecting a likely future growth rate for a company.

The formula for Implied Growth is:

Implied Growth = % Return On Equity x (1 - Dividend Payout Ratio)

From the Stock Study, Toolkit uses the 5-Year Average Return on Equity from Section 2B, and the 5-Year Average Dividend Payout Ratio from Section 3 (or from Section 5 if adjusted by the user) for this calculation.

For companies that pay no dividends, the Implied Growth Rate will be equal to the Return on Equity.
Back to top
Users browsing this topic
Guest (2)
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Powered by YAF.NET | YAF.NET © 2003-2024, Yet Another Forum.NET
This page was generated in 0.791 seconds.