Term of the Day - Organic Growth

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What Does Organic Growth Mean?

The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.

 

Organic growth represents the true growth for the core of the company. It is a good indicator of how well management has used its internal resources to expand profits. Organic growth also identifies whether managers have used their skills to improve the business.

Replies (7)

Noted...Many thanks !!!

in today's environment most of the companies disclose only inorganic profits

Originally posted by : I LOVE MY CA COURSE

in today's environment most of the companies disclose only inorganic profits

 Absolutely agreed with you.

Also, The Organic Growth can be helpful in providing a one additional analysis of the company success and actual profit earned.

Thanks a lot for reading.

It is tough to determine...or rather diferentiate between ORGANI And INORGANIC growth...

Originally posted by : Ankit Jain

It is tough to determine...or rather diferentiate between ORGANI And INORGANIC growth...

 Ankit, I undertsand that there is no mandatory requirement to disclose or calculate Organic Growth. But i don't agree on that it is tough to determine, because the accounting entries consisting of amalgamation, merger etc are generally made according to regulations and guidelines, and if needed there effect can be determined from the boks of account.

Anyways, Thanks for reading.

thanx Rahul

Thanx Rahul ..........i always gain sumthing new frm ur term of d day.............


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