Answered: Water and Power Co. (W&P) had sales of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Water and Power Co. (W&P) had sales of $1,790,000 last year on fixed assets of $345,000. Given that W&P’s fixed assets were being used at only 95% of capacity, then the firm’s fixed asset turnover ratio was

x. (Note: Round your answer to two decimal places.)

How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets? (Note: Round your answer to the nearest whole number.)

$1,695,790

$1,978,422

$1,884,211

$1,790,000

When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? (Note: Round your answer to two decimal places.)

19.23%

17.39%

18.31%

16.48%

Suppose W&P is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed-assets turnover ratio for this year is _______________ .(Note: Round your answer to two decimal places.)

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