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3. Excess capacity adjustments Water and Power Co. (W&P) had sales of $1,400,000 last year on...

3. Excess capacity adjustments

Water and Power Co. (W&P) had sales of $1,400,000 last year on fixed assets of $330,000. Given that W&P’s fixed assets were being used at only 93% of capacity, then the firm’s fixed asset turnover ratio was ……………………..?

How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets?

$1,430,107

$1,279,570

$1,505,376

$1,806,451

When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio?

26.30%

21.92%

18.63%

20.82%

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 …………………….?

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jeff jeffy answered 1 year ago
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