Review the chapter's opening feature involving Matt Hofmann and his company, Westland Distillery. Assume that the company currently has net sales of $8,000,000 and that it is planning an expansion that will increase net sales by $4,000,000. To accomplish this expansion, Westland Distillery must increase its average total assets from $2,500,000 to $3,000,000.

Required

1. Compute the company's total asset turnover under

(a) Current conditions

(b) Proposed conditions.

2. Evaluate and comment on the merits of the proposal given your analysis in part 1. Identify any concerns you would express about the proposal.