Funding rapid growth by piling on debt is the riskiest way to expand. All growth companies hit bumps sooner or later, and it's important they maintain the financial muscle to absorb the shocks.
Starbucks boasts this muscle, keeping its balance sheet in good shape despite its aggressive expansion. The firm reduced its financial leverage from 1.6 in 1997 to 1.3 in 1999, and shareholders' equity has increased 20% annually over the past three years (as opposed to 13% for the S&P 500).
What Are the Trends in Growth Rates? >>