Case 15: Space-age materials

Question

Assume that you are now at the retreat, discussing the forecast with Space-Ages senior executives. The vice president for manufacturing informs you that fixed assets were actually being operated at only 80 percent of capacity in 1992. What effect would this have on your projected external capital requirement for 1993? In answering this question, disregard any financing feedback effects and answer the question by modifying the 1st pass columns of Table 3, but explain how you could go on to reach a balanced solution. Also, in answering this and the next question, assume that depreciation expenses remain constant as a percent-age of sales.