AuthorTopic: FRA techniques - definition of "aggressive expansion"
@2017-04-06 16:07:03
A question asks, which company had the most aggressive expansion:

Company A had asset growth of 12%, and Debt to capital ratio increased from 0.43 to 0.55
Company B had asset growth of 15%, and Debt to capital ratio increased from 0.51 to 0.62

The answer is B because of the asset growth. Could it be A because it financed that growth by increasing the debt more than company B? My focus is on the “aggressive” not the “growth”.
@2017-04-07 18:30:26
IMO, under meaning of aggressive should be consider rapidly increase of market share and it can be correlated with increasing of total assets. Debt to capital may increase even at passive management strategies simply by paying greater dividends in case this ratio will worsen.
@2017-04-08 12:57:38
Company B. In absolute terms, the ratio of Debt t0 Capital is highest for company A, but asset growth increased the most for Company B.

This means Company used lesser debt to finance its aggresive growth, which makes it aggressive and also efficient than company A.

CFA Discussion Topic: FRA techniques - definition of "aggressive expansion"

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