Organic growth

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Organic growth is the growth rate a company can achieve by increasing output and enhancing sales rather than by acquisitions or mergers. It refers to profit generated within the company. It is often seen as a good indicator of how well management has used its internal resources to expand profits.[1]

Organic growth does include growth resulting from investment in businesses the company owned at the beginning of the period in question. When a company does not disclose organic growth numbers, it is possible to estimate them by estimating the numbers for acquisitions made in the period being looked at and in the previous year. It is useful to break down organic sales growth into that coming from market growth and that coming from gains in market share: this makes it easier to see how sustainable growth is.[2]

References

  1. Organic Growth. Investopedia.
  2. Organic Growth. Moneyterms.co.uk.