Williamson Industries has $7 billion in sales and $1.944 billion in fixedassets. Currently, the company’s fixed assets are operating at 90% of capacity.a. What level of sales could Williamson Industries have obtained if it had been operatingat full capacity?b. What is Williamson’s target fixed assets/sales ratio?c. If Williamson’s sales increase 15%, how large of an increase in fixed assets will thecompany need to meet its target fixed assets/sales ratio?
Williamson Industries has $7 billion in sales and $1.944 billion in fixedassets. Currently, the company’s fixed assets are operating at 90% of capacity.a. What level of sales could Williamson Industries have obtained if it had been operatingat full capacity?b. What is Williamson’s target fixed assets/sales ratio?c. If Williamson’s sales increase 15%, how large of an increase in fixed assets will thecompany need to meet its target fixed assets/sales ratio?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 20P
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Williamson Industries has $7 billion in sales and $1.944 billion in fixed
assets. Currently, the company’s fixed assets are operating at 90% of capacity.
a. What level of sales could Williamson Industries have obtained if it had been operating
at full capacity?
b. What is Williamson’s target fixed assets/sales ratio?
c. If Williamson’s sales increase 15%, how large of an increase in fixed assets will the
company need to meet its target fixed assets/sales ratio?
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