Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Last year Stokes Technologies had $350 million of sales and $150 million of fixed assets, so its Fixed Assets/Sales ratio was 42.86%. However, its fixed
Last year Stokes Technologies had $350 million of sales and $150 million of fixed assets, so its Fixed Assets/Sales ratio was 42.86%. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set? Show your calculations, if any, and explain your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started