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
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
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 7P
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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 support its expected sales for next year? (Note: Round your answer to the nearest whole number.)
$45,713
$52,570
$54,856
$47,999
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