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The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that
The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at percent capacity. Fullcapacity sales would be $ $ The balance sheet shows $ in fixed assets. The capital intensity ratio for the company is:
Capital intensity ratio Fixed assetsFullcapacity sales $$
This means that Rosengarten needs $ in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $ it needs $times $ in fixed assets, which is $ lower than our projection of $ in fixed assets. So EFN is $ $
Blue Sky Manufacturing, Incorporated, is currently operating at percent of fixed asset capacity. Current sales are $ and sales are projected to grow to $ The current fixed assets are $
How much in new fixed assets is required to support this growth in sales? Do not round intermediate calculations and round your answer to the nearest whole number, eg
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