Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set?

Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 4P

See similar textbooks

Related questions

Q: MBI Incorporated had sales of $35 million for fiscal 2022. The company's gross profit ratio for that…

A: Calculation: a. Percentage of gross profit is given which is 26%, therefore: Gross Profit = Sales…

Q: Forecasting financing needs) Beason Manufacturing forecasts its sales next year to be $5.4 million…

A: Net income refers to an amount that is being earned by the company from its business after deducting…

Q: Last year Jain Technologies had $260 million of sales and $104 million of fixed assets, so its Fixed…

A: Stakeholders can evaluate the financial performance of an organization over time using ratio…

Q: The financial manager of Company X has just received the sales forecast for next year and it…

A: What are the sales projections? Your expectations of future sales revenue is expressed in a sales…

Q: (Forecasting financing needs) Beason Manufacturing forecasts its sales next year to be $5.6 million…

A: Next year's sales = 5,600,000Profit after tax = 4.3% of salesCurrent assets = 19.3% of salesFixed…

Q: A company's invested capital is $13,000,000 and management has determined that the target rate of…

A: Operating income: A company's operating income is the amount of profit it makes after subtracting…

Q: Calculate the ROI and calculate the Economic Profit.

A: Return on investment can be calculated with the formula ROI = Net IncomeInvestment=16,000100,000=…

Q: Determine the value of the External money needed for next year. 2. What would be the impact on ROE…

A: Sales in the next year will increase by 15% and the current assets, fixed assets and current…

Q: Quyox Sdn Bhd manufactures a special toy called Omma that are sold through a network of sales agents…

A: Cost Volume Profit analysis is a cost accounting tool that assess impact of variation in costs and…

Q: The Hydride Division of Murdoch Corporation is an investment center. It has $1,000,000 of operating…

A: We have the following information: Operating Assets: $1,000,000 Operating Income: $400,000 Sales:…

Q: Which of the following is the best example of a well-stated financial objective? A) Increase market…

A: The well stated financial objectives properly the reflecting all the objectives of the company…

Q: Kaler Company has sales of $1,470,000, cost of goods sold of $800,000, other operating expenses of…

A: Return on investment meaning(ROI):- ROI is a basically a measure of an investment's performance and…

Q: Moore Money is a financial services firm specializing in fixed-income investments. You have…

A: Return on sales: Return on sales is a metric that measures the efficiency of the organization. It is…

Q: 1. DPCL is a small-sized firm manufacturing hand tools. Its manufacturing plant is situated in…

A: Net present value is the net present worth of a project computed by the concepts of the time value…

Q: Innovation Company is thinking about marketing a new software product. Upfront costs to market and…

Q: 3. Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its…

A: Sales revenue is the gross earnings generated by the business by selling goods or services during a…

Q: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1…

A: Operating Profit: Operating profit refers to the profit generated by the firm from normal business…

Q: The S&H construction company expects to have total sales next year totaling $15,300. In addition,…

A: Sales = 15,300 Tax Rate = 35% Interest Expense = 280,000 Cost of goods sold = 57% of Sales Operating…

Q: Based on this information, create and solve a ratio analysis: In their most recent discussion with…

A: The objective of the question is to determine the number of employees that need to be hired in 2022…

Q: The Western Division of Claremont Company had net operating income of $154,000 and average invested…

A: The return on investment is calculated as the net income divided by average assets. The residual…

Q: Suppose a firm has had the following historic sales figures. What would be the forecast for next…

A: Let's examine each stage in greater detail: 1. Fill in the Excel spreadsheet's input field with the…

Q: Sanders Inc. has developed a new product line that they believe will revolutionize their industry…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: You are an analyst working for Goldman Sachs, and you are trying to value the growth potential of a…

A: Future opportunities are those opportunities that are going to generate benefits in the future for…

Q: The Manning Company has financial statements as shown next, which are representative of the…

A: The following computations are done to check for external financing needs.

Q: Please give me correct answer

A: Step 1: Introduction Gross Profit MarginThe gross profit is the company's trading profit that…

Question

	a.	19.0%
	b.	14.6%
	c.	16.0%
	d.	15.4%
	e.	14.2%

please type out all of your work

Leveraging special tenchniques in analyzing historical data to predict future trends. Forecasting covers the methods and types of forecasting and their application to case studies.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Answers working

VIEW

Answer

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set? Please explain the process and show calculations.
Last year Jain Technologies had $260 million of sales and $104 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 60% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set? a. 24.00% b. 19.35% c. 17.14% d. 31.58% e. 11.43%
when answering the question please type out all of your work
Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 90% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set? Select the correct answer. a. 34.3% b. 36.0% c. 37.7% d. 32.6% e. 30.9%
Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set? A) 28.5% B 30.0% C) 31.5% D) 33.1% E 34.7%
Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 60% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,390,000 in annual sales, with an 6 percent profit margin. What would net income and return on assets (investment) be for the year?
Consider the following scenario: Green Caterpillar Garden Supplies Inc.'s Income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Green Caterpillar is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before Interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 60% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Green Caterpillar expects to pay $100,000 and $1,759,500 of preferred and common stock dividends, respectively. Complete the Year 2 Income statement data for Green Caterpillar, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Net sales Less: Operating costs, except depreciation…
Consider the following scenario: Green Caterpillar Garden Supplies Inc.’s income statement reports data for its first year of operation. The firm’s CEO would like sales to increase by 25% next year. 1. Green Caterpillar is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company’s operating costs (excluding depreciation and amortization) remain at 60% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company’s tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Green Caterpillar expects to pay $100,000 and $1,759,500 of preferred and common stock dividends, respectively. A. Complete the Year 2 income statement data for Green Caterpillar, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Green Caterpillar…
Apex Ltd. is attempting to determine the optimal level of current assets for the coming year. Management expects sales to increase to $2 million as a result of the just completed asset expansion. Fixed assets total $1 million, and Apex wants to maintain a 60 percent debt ratio. Its interest cost on all debt is 8 percent. Three different current asset levels are being evaluated by the firm. These are (i) a tight policy requiring current assets of 45% of projected sales (ii) a moderate policy with current asset levels being 50% of projected sales (iii) a relaxed policy with current assets being 60% of projected sales. The firm's tax rate is 40%. EBIT = $240,000. What is the expected return on equity under each current asset level?
Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet: Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accounts receivable Accrued liabilities Inventories Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 $3,000,000 Notes payable Total Current Liabilities Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000
Water and Power Co. (W&P) currently has $575,000 in total assets and sales of $1,400,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is . (Note: Round your answer to the nearest whole number.) W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,547,368 $1,768,421 $1,473,684 $1,694,737 When you consider that W&P’s fixed assets were being underused, its target fixed assets to sales ratio should be %. (Note: Round your answer to two decimal places.) When you consider that W&P’s fixed assets were being underused, how much fixed assets must W&P raise to…