Question

Is the rate of expansion (investment in PPE) compatible with the expected sales growth

Is the rate of expansion (investment in PPE) compatible with the expected sales growth

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The rate of expansion is basically the rate at which there is increase in investments in asset of the company and expected sales growth is increase in the turnover. The relationship between investment in assets is directly proportional to sales, i,e, if there is increase in the assets employed in generation of business will grow the business and similarly if assets are reduced so will the business.

Thus the rate of expansion is said to be compatible with expected sales growth.

PPE turnover can be calculated by = Revenue/ PPE

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Grf dividends are expected to have a 20 percent short term growth rate for the next...
Grf dividends are expected to have a 20 percent short term growth rate for the next four years. beginning in year 5, the growth rate is expected to drop to 7 percent per year and last indefinately. A. if grf paid a $3 dividend (div 0) and the appropriate discount rate is 15%, then what is the price of a share of Grf? B. if you know that the short term return of a new investment is 18%, what should...
Is the annual growth rate on an investment the equivalent of the after-tax nominal rate of...
Is the annual growth rate on an investment the equivalent of the after-tax nominal rate of return, the real rate of return or the after-tax real rate of return ?
Varaha Chemicals Limited is interested in estimating its sustainable sales growth rate. Last year, revenues were...
Varaha Chemicals Limited is interested in estimating its sustainable sales growth rate. Last year, revenues were Rs. 10,00,000, net profit was Rs. 75,000, investment in assets was Rs. 6,00,000, payables and accruals were Rs. 1,20,000, and equity at the end of the year was Rs. 7,25,000 (i.e., beginning-of-year equity of Rs. 6,50,000 plus retained profits of Rs. 75,000). The venture did not pay out any dividends and does not expect to pay dividends for the foreseeable future. Estimate the sustainable...
Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend...
Use the Constant Dividend Growth Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $15.85 per share in one year. ELO shares are currently trading for $238.35 on the NYSE, and the expected annual rate of return for ELO shares is 11.11%. Answer as a % to 2 decimal places (e.g., 12.34% as 12.34).
The rate of growth of sales (sales per day) for a particular company is predicted to...
The rate of growth of sales (sales per day) for a particular company is predicted to be 45e^0.04t ,  beginning with sales of 300 items on day t = 0. Find a formula for the total number of sales in the first t days.
A firm had sales of $15 million last year while running its manufacturing facilities at 90%...
A firm had sales of $15 million last year while running its manufacturing facilities at 90% capacity. $80M PPE a. What is the maximum capacity sales that could be forecast without requiring additional investment in PPE? b. If sales are forecast to increase by 10%, what is the necessary investment in PPE? c. If instead sales were forecast to increase by 25%, what would be the necessary investment in PPE?
CONSTANT GROWTH You are considering an investment in Justus Corporation's stock, which is expected to pay...
CONSTANT GROWTH You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00) and has a beta of 0.9. The risk-free rate is 4.5%, and the market risk premium is 5.0%. Justus currently sells for $40.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will...
Computing and Evaluating Receivables, Inventory, and PPE Turnovers 3M Company reports the following financial statement amounts...
Computing and Evaluating Receivables, Inventory, and PPE Turnovers 3M Company reports the following financial statement amounts in its 10-K report: ($ millions) Sales Cost of Sales Receivables Inventories PPE, net 2014 $31,821 $16,447 $4,238 $3,706 $8,489 2013 30,871 16,106 4,253 3,864 8,652 2012 29,904 15,685 4,061 3,837 8,378 Required Compute the receivables, inventory, and PPE turnover ratios for both 2014 and 2013. (Receivables turnover and inventory turnover are discussed in Chapters 6 and 7, respectively.) Round to two decimal places....
The best definition for economic growth is a sustained expansion of production possibilities measured as the...
The best definition for economic growth is a sustained expansion of production possibilities measured as the increase in real GDP over a given period. a sustained expansion of production possibilities measured as the increase in nominal GDP over a given period. a sustained expansion of consumption goods over a given period. a sustained expansion of production goods over a given period. If a nation's population grows, then growth in real GDP per person will be less than the growth of...
KK company has current sales of $1,000, current expected growth of 5%, and a WACC of...
KK company has current sales of $1,000, current expected growth of 5%, and a WACC of 10%. The company has profitability (OP=6%) but high capital requirements (CR=78%). What is the MVA of KK company based on the current growth of 5%?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT