What Is the Internal Capital Technology Rate (ICGR)?
The internal capital technology worth (ICGR) is a quantifiable mathematical worth that portrays how in brief a monetary establishment is able to generate. The internal capital technology worth is calculated thru dividing the monetary establishment’s retained source of revenue throughout the not unusual balance of the mixed equity of all stockholders for a given accounting length. The monetary establishment’s retained source of revenue are came upon thru subtracting dividends paid from internet income using the income statement, while the value of owners’ equity can be came upon on the balance sheet.
A greater ICGR will building up a monetary establishment’s profitability and implies that it has additional capital available for making new loans.
The Approach for the Internal Capital Technology Rate (ICGR) Is

ICGR = frac{text{Retained source of revenue}}{text{Cheap mixed equity}} ICGR=Cheap mixed equityRetained source of revenue​
What Does the Internal Capital Technology Rate (ICGR) Tell You?
The higher the internal capital technology worth, the additional able a monetary establishment is to offer capital to be able to loan to borrowers that because of this reality generate new passion income for the monetary establishment. The internal capital generate worth improves with a monetary establishment’s common profitability and is also affected by the price of its stock given that stock value is claimed to the value of cheap homeowners’ equity.
An alternative approach to calculate the internal capital technology worth is to take the plowback ratio and multiply throughout the return on equity (ROE). The plowback ratio is what is left over after dividends have been paid out of retained source of revenue.
However differently to believe the ICGR is that it tells a monetary establishment that relying most simple on internally generated capital, it is going to almost definitely amplify its assets thru a specific amount while maintaining its capital ratio. In this case, the calculation can be modified to:

get started{aligned} ICGR &= text{Return on equity}*left(1-text{dividend payout ratio}correct) &= text{Return on equity}*text{Plowback ratio} end{aligned} ICGR​=Return on equity∗(1−dividend payout ratio)​
Example of Easy methods to Use the Internal Capital Technology Rate (ICGR)
As a hypothetical example, if the plowback ratio for a company is made up our minds to be 0.80 and its return on equity is 17%, the internal capital technology worth is 13.6%. Thus, the company grew its internal capital equity thru 13.6%:

ICGR = 0.17 * 0.80 = 0.136 ICGR=0.17∗0.80=0.136
However, we will get began with a retained source of revenue for a company of $650,000 and to search out from the stableness sheet that cheap homeowners’ equity for the length was valued at $4.78 million. The internal capital technology worth would thus be $650,000 / $4,780,000 = 0.136, or 13.6%. Each manner, the two methods of calculating the corporate’s ICGR produce the an identical outcome.
