Walter Industries has $7 billion in sales and $2.5 billion in fixed assets. Curr

Question

Walter Industries has $7 billion in sales and $2.5 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity.

A. What level of sales could Walter Industries have obtained if it had been operating at full capacity? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Round your answer to the nearest cent.

$ 7,368,421,053 CORRECT.

B.What is Walter's target fixed assets/Sales ratio? Round your answer to two decimal places.

33.93%   CORRECT

NEED THIS ONE:

C.If Walter's sales increase 11%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Write out your answer completely. For example, 25 billion should be entered as 25,000,000,000. Round your answer to the nearest cent. Do not round intermediate calculations.

$               

Explanation / Answer

Hi,

Please find the answer as follows:

Target Fixed Assets to Sales Ratio = Revised Fixed Assets/Revised Sales*100

33.93% = Revised Fixed Assets/7368421053*(1+.11)*100

Revised Fixed Assets = 2775116842

Less Original Value of Fixed Assets = 2500000000

Increase in Fixed Assets = 275116842

Answer is 275116842.

Thanks.

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