Organic Growth

Accounting Dictionary

Organic Growth

Organic growth is the increase in profits generated by the operations of existing stores, the stores you owned on for the entire year.

In 2016, John’s drug store made a profit of $75,000. In 2017 it made a profit of $80,000. In April of 2017 John opened a second store that generated a profit of $160,000. John’s total profit increased from $75,000 in 2016 to $240,000 in 2017 ($80,000 + 240000), a total increase of $165,000 ($240,000 -$75,000). Of that $165,000 increase only $5000 was organic growth. Only $5000 of the increase came from a store he had owned in 2016.

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