Now I really don't know a thing on company growth except hearing a thing or two during my company's induction. But since it made sense logically to breakdown a company's growth into so many categories, I decided to dig around more so that I have a brief understanding on what they were.
What I've learned today is:
1. Real Internal Growth: It is a declaration. Meaning it can't be forecast. You declare or report your real internal growth, which comprises of the increase in real volume sales, excluding all the other exogenous factors like depreciation, appreciation etc. Real internal growth also excludes new businesses acquired, merges or extra investments made.
2. Organic Growth: Almost the same as RIG, but more to a projection of the growth of a company. Mostly used to project or make deductions for the future. Another difference is organic growth is enhances by sales (pricing).
3. Inorganic Growth: Merger and acquisition falls under this category. Theoretically speaking if A buys B, hence the sum would be A+B.
Example: A is a food manufacturing company. On year 2012, A produced and sold 100mT of products and sold them for MYR 100 million. In year 2013, A produced 110mT of products and sold them for MYR 150 million. At the beginning of the year 2013, A bought over B as an acquisition.
A's RIG will be that extra 10mT of products produced and sold.
A's Organic growth will be that extra MYR 40 million (150-110) they earn due to pricing (increase in price comparing 2013 and 2012.
A's Inorganic growth will be the acquisition of B.
Hope I get it correct. Please correct me if I got it wrong :)
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