Review the chapter’s opening feature involving Queston Construction. Assume that it generates annual sales of $3 million on an average total asset base of $1,000,000. To increase sales, Cordova proposes to expand her construction company, which would increase average total assets by $500,000. This expansion is expected to increase net sales by $2,500,000.

Required 1. Compute the company's total asset turnover under

(a) current conditions and

(b) proposed con¬ ditions.

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