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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

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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

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