Question

Described how a business would like to focus on asset growth. In this discussion, list how a business can grow assets and how does that relate to equity growth?

Answer 1

A business can focus on asset growth in the following way

1. Sales

The key to managing asset growth in businesses is to forecast sales correctly. If actual sales is different from projected sales, then inventory will unexpectedly either build up or decline and also same thing happen on receivables. If your projections are right and sales grow, you also have to experience asset growth.

2. Reducing Debt

If you are interested in building asset growth, it is also important to do your best to get rid of any debt that you may have.

3. Buy Assets

One of the best ways that you can grow the asset growth of your business is to purchase assets. When calculating the asset growth, the liabilities of the company are subtracted from the assets. If you want to boost the asset growth, you simply need to increase the number of assets that you have. When buying assets, it is important to make sure that you get things that will hold their value or appreciate in value.

Asset growth directly related to net worth of the company. If you having growth in assets and debts are reduced or constant, then net worth of the company increased also growth in equity.