Please explain how to solve the following with correct answer. Thank you 1. Weber Interstate Paving Co.
Question:
Please explain how to solve the following with correct answer. Thank you
1. Weber Interstate Paving Co. had $450 million of sales and $225 million of fixed assets last year, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 90% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated?
Select the correct answer.
a. $26.50 b. $24.50 c. $28.50 d. $22.50 e. $20.50
2. Last year Baron Enterprises had $650 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year. In millions, by how much could Baron's sales increase before it is required to increase its fixed assets?
Select the correct answer.
a. $350.0 b. $337.4 c. $343.7 d. $356.3 e. $331.1