EXCESS CAPACITY Earleton Manufacturing Company has $3 billion in sales and $787,500,000 in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity. a. What level of sales could Earleton have obtained if it had been operating at full capacity? b. What is Earleton’s target fixed assets/sales ratio? c. If Earleton’s sales increase 30%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?
Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
EXCESS CAPACITY Earleton Manufacturing Company has $3 billion in sales and $787,500,000 in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity.
- a. What level of sales could Earleton have obtained if it had been operating at full capacity?
- b. What is Earleton’s target fixed assets/sales ratio?
- c. If Earleton’s sales increase 30%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?
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