Growth Capacity Benchmark Calculation

  1. Home
  2. Blogs
  3. Definition
  4. Growth Capacity Benchmark Calculation

Growth Capacity

How it’s calculated

((Net Profit (bos) – Current assets – Current liabilities) / Total Income) * 100

See our for explanation of Net Profit (bos) (link to

How it’s used

Growth Capacity is a benchmark which shows whether the business can afford to fund its growth. If the result here is a large positive number, then ‘growth’ should be reasonably easy to fund; if the result is negative, then growing the business will demand more working capital than the additional profit which is generated. A negative (or even a low positive result) is therefore a warning sign. To improve this ratio, either work to increase the ‘profit’ aspect of the equation, or work to reduce the working capital requirements of the business.

Accountants and Business Advisors, Have you taken advantage of the Benchmark Suite FREE trial? Get started today

Recent Articles