Question

5. Excess capacity adjustments Water and Power Co. (W&P) had sales of $1,720,000 last year on fixed assets of $330,000. Given that W&P’s fixed assets were being used at only 96% of capacity, then the firm’s fixed asset turnover ratio was x. (Note: Round your answer to two decimal places.) How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,881,250 $1,791,667 $1,970,834 $1,612,500 When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? (Note: Round your answer to two decimal places.) 19.34% 18.42% 16.58% 20.26% Suppose W&P is forecasting sales growth of 18% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed-assets turnover ratio for this year is .(Note: Round your answer to two decimal places.

Answer 1

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