Ch16 Assignment- Financial Planning and Forecasting

4. Excess capacity adjustments

Osato Chemicals Inc. currently has $490,000 in total assets and sales of $1,720,000. Half of Osato's total assets come from net fixed assets,and the rest are current assets. The firm expects sales to grow by 18% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is ___________________

Osato was using its fixed assets at only 96% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets?

a. $1,522,917

b. $1,970,834

c. $1,791,667

d. $2,060,417

When you consider that Osato's fixed assets were being underused, its target fixed assets to sales ratio should be ___________________

When you consider that Osato's fixed assets were being underused, how much fixed assets must Osato raise to support its expected sales for next year?

a. $26,029

b. $29,282

c. $32,536

d. $37,416