In: Finance

# Last year LaCroix Optical had $145 million of sales, and it had$40 million of fixed...

1. Last year LaCroix Optical had $145 million of sales, and it had$40 million of fixed assets that were used at 75% of capacity. Use this information to solve the next two problems.
1. In millions, by how much could LaCroix Optical sales increase before it is required to increase its fixed assets?

2. LaCroix Optical was approached by the Department of Defense (DoD)because of their ability to manufacture the lens required for night vision goggles. LaCroix Optical is the last remaining firm domiciled in the United States that can manufacture the night vision lens, and subsequently the DoD designated the company as essential critical infrastructure. The company’s sales are expected to approximately double after signing a DoD contract. How much additional financing will LaCroix Optical need?

## Solutions

##### Expert Solution

a)

LaCroix Optical sales can be increased by $48.33 M without any increase to its existing fixed assets last year sales is given. This sales is at 75% capacity. we need to find the sales at 100% capacity. now the unused 25% capacity will be the level of sales that can be increased without any increase to is FA. b) additional financing needed by LaCroix Optical is$ 20M

the sales is expected to double. so we need to find the expected sales for the next year. The maximum sales possible from 100% capacity utilization of existing assets is already ascertained above. we need to find the difference between expected sales and maximum sales at 100% of existing Capacity. This will give the additional sales required- which will be possible only through additional capacity expansion.This value of additional assets will be the additional financing required

Additional FA or (finance) required   = (Additional Sales Required / Sales at 100% capacity X Fixed Assets )

## Related Solutions

##### Last year LaCroix Optical had $145 million of sales, and it had$40 million of fixed...
Last year LaCroix Optical had $145 million of sales, and it had$40 million of fixed assets that were used at 75% of capacity. Use this information to solve the next two problems. (10 points) In millions, by how much could LaCroix Optical sales increase before it is required to increase its fixed assets? (10 points) LaCroix Optical was approached by the Department of Defense (DoD)because of their ability to manufacture the lens required for night vision goggles. LaCroix Optical...
##### 1.  Inventory Management Williams & Sons last year reported sales of $145 million, cost of goods sold... 1. Inventory Management Williams & Sons last year reported sales of$145 million, cost of goods sold (COGS) of $120 and an inventory turnover ratio of 5. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 8 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer... ##### A firm has$40 million in sales last year. Its asset to sales ratio is .4...
A firm has $40 million in sales last year. Its asset to sales ratio is .4 and its net profit margin of .07. The firm plans to maintain its current retention ratio is .6; its payables amount to$400,000 million, and it does not have any bank loans as notes payable. If 20% increase in sales is anticipated, how much additional financing is required?
##### Butterfly Tractors had $15.00 million in sales last year. Cost of goods sold was$8.20 million,...
Butterfly Tractors had $15.00 million in sales last year. Cost of goods sold was$8.20 million, depreciation expense was $2.20 million, interest payment on outstanding debt was$1.20 million, and the firm’s tax rate was 21%. a. What was the firm’s net income? (Enter your answers in millions rounded to 2 decimal places.) b. What was the firm’s cash flow? (Enter your answers in millions rounded to 2 decimal places.) c. What would happen to net income and cash flow...