Question
In: Finance
Albion Corporation has $550,000 in net fixed assets and is currently operating at 90% capacity. The...
Albion Corporation has $550,000 in net fixed assets and is currently operating at 90% capacity. The firm's sales are $1,210,000 and they are forecasted to grow by 15% next year.
a. What is the maximum sales level Albion's net fixed assets can support?
b. What is Albion's target capital intensity ratio?
c. What level of net fixed assets will Albion need to support its projected sales?
d. How much additional net fixed assets will need to be acquired for next year?
Solutions
Expert Solution
a.
Maximum sales level Ambion's net fixed assets can support =
= $ 1,344,444.44
b.
Albions target capital intensity ratio = 
....... since the information for total assets(fixed + current) is not given, it is not possible to find out the capital intensity ratio...
c.
assuming that the fixed assets can run at 100% capacity without any additional abnormal loss of output.
the level of net fixed assets required will be =
= 
= 
= $569,250
The minimum net fixed assets required to support its projected sales is $569,250
d.
additional net fixed assets to be acuquired for next year
= minimum net fixed assets required to support projected sales - current net fixed assets
= $569,250 - $550,000
= $19,250
(however it is key to note that this answer is only the best possible answer given the circumstances, since the information about the depreciation is not available. if depreciation amount is given. in order to remain consistent we must divide the above figure by (1 - depreciation rate) to arrive at the figure)
jeff jeffy answered 1 year agoRelated Solutions
A firm has total assets of $311,770 and net fixed assets of $167,532. The average daily operating costs are $2,980.
A firm has total assets of $311,770 and net fixed assets of
$167,532. The average daily operating costs are $2,980. What is the
value of the interval measure?
EXCESS CAPACITY Williamson Industries has $8 billion in sales and $2.6 billion in fixed assets. Currently,...
EXCESS CAPACITY
Williamson Industries has $8 billion in sales and $2.6 billion
in fixed assets. Currently, the company's fixed assets are
operating at 95% of capacity.
A. What level of sales could Williamson Industries have obtained
if it had been operating at full capacity? Write out your answer
completely. For example, 25 billion should be entered as
25,000,000,000. Round your answer to the nearest cent.
$ __________
B. What is Williamson's target fixed assets/sales ratio? Round
your answer to two...
EXCESS CAPACITY Williamson Industries has $6 billion in sales and $1.4 billion in fixed assets. Currently,...
EXCESS CAPACITY
Williamson Industries has $6 billion in sales and $1.4 billion
in fixed assets. Currently, the company's fixed assets are
operating at 95% of capacity.
What level of sales could Williamson Industries have obtained
if it had been operating at full capacity? Write out your answer
completely. For example, 25 billion should be entered as
25,000,000,000. Round your answer to the nearest cent.
$
What is Williamson's target fixed assets/sales ratio? Round
your answer to two decimal places....
Hodgkiss Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity.
Hodgkiss Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $620,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)Maximum growth sales ?
Net capital spending is equal to: ending net fixed assets minus beginning net fixed assets plus...
Net capital spending is equal to:
ending net fixed assets minus beginning net fixed assets plus
depreciation.
ending total assets minus beginning total assets plus
depreciation.
ending net fixed assets minus beginning net fixed assets minus
depreciation.
beginning net fixed assets minus ending net fixed assets plus
depreciation.
Fanning Corporation’s balance sheet indicates that the company has $550,000 invested in operating assets. During 2018,...
Fanning Corporation’s balance sheet indicates that the company has
$550,000 invested in operating assets. During 2018, Fanning earned
operating income of $60,500 on $1,100,000 of sales.
Required
Compute Fanning’s profit margin for 2018.
Compute Fanning’s turnover for 2018.
Compute Fanning’s return on investment for 2018.
Recompute Fanning’s ROI under each of the following independent
assumptions:
(1) Sales increase from $1,100,000 to $1,320,000, thereby resulting
in an increase in operating income from $60,500 to
$67,320.
(2) Sales remain constant, but Fanning...
Fanning Corporation’s balance sheet indicates that the company has $550,000 invested in operating assets. During 2018,...
Fanning Corporation’s balance sheet indicates that the company has
$550,000 invested in operating assets. During 2018, Fanning earned
operating income of $60,500 on $1,100,000 of sales.
Required
Compute Fanning’s profit margin for 2018.
Compute Fanning’s turnover for 2018.
Compute Fanning’s return on investment for 2018.
Recompute Fanning’s ROI under each of the following independent
assumptions:
(1) Sales increase from $1,100,000 to $1,320,000, thereby resulting
in an increase in operating income from $60,500 to
$67,320.
(2) Sales remain constant, but Fanning...
Hodgkiss Mfg., Inc., is currently operating at only 96 percent of fixed asset capacity. Current sales...
Hodgkiss Mfg., Inc., is currently operating at only 96 percent
of fixed asset capacity. Current sales are $520,000. Fixed assets
are $410,000 and sales are projected to grow to $750,000. How much
in new fixed assets are required to support this growth in sales?
Assume the company wants to operate at full capacity. (Do
not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
New fixed assets
Thorpe Mfg., Inc., is currently operating at only 87 percent of fixed asset capacity. Current sales...
Thorpe Mfg., Inc., is currently operating at only 87 percent of
fixed asset capacity. Current sales are $660,000. How fast can
sales grow before any new fixed assets are needed?
Maximum sales growth
%
Thorpe Mfg., Inc., is currently operating at only 96 percent of fixed asset capacity. Current sales...
Thorpe Mfg., Inc., is currently operating at only 96 percent of
fixed asset capacity. Current sales are $610,000. Suppose fixed
assets are $550,000 and sales are projected to grow to $643,000.
How much in new fixed assets is required to support this growth in
sales? (A negative value should be indicated by a minus
sign. Do not round intermediate calculations. Round your answer to
the nearest whole number.)
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The following schedule of information relates to Lumos, Inc. for the year ended December 31, 2017:...
- Willow Brook National Bank operates a drive-up teller window that allows customers to complete bank transactions...
- According to a daily newspaper, the probability is about 0.74 that the favorite in a horse...
- Global CO2 concentration is rising rapidly. Which type of plants are more likely to benefit from...
- 1) a car of mass 999 kg traveling at 72.0 km/hour enters a flat(non-banked) and dry...
- A department store supervisor is concerned about customer service. To check if this is an issue,...
- For a first order process G(s)= 4/(s+0.5): (a) Qualitatively sketch the pattern of the Bode diagram...
ADVERTISEMENT