EXCESS CAPACITY Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company’s fixed assets are operating at 90% of capacity. a. What level of sales could Walter Industries have obtained if it had been operating at full capacity? b. What is Walter’s target fixed assets/sales ratio? c. If Walter’s sales increase 12%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 17, Problem 5P
Textbook Problem

EXCESS CAPACITY Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company’s fixed assets are operating at 90% of capacity.

  1. a. What level of sales could Walter Industries have obtained if it had been operating at full capacity?
  2. b. What is Walter’s target fixed assets/sales ratio?
  3. c. If Walter’s sales increase 12%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?

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