Excess capacity Walter Industries has $8 billion in sales and $1.3 billion in fi

Question

Excess capacity

Walter Industries has $8 billion in sales and $1.3 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity.

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.
$   

THIS ANSWER IS 8421052631.6

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

If Walter's sales increase 12%, 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.
$   

Commen

Explanation / Answer

Sales       8,000,000,000.00 Fixed Assets       1,300,000,000.00 Current Capacity 95% Increased Capacity 100% Total Sales at 100% capacity = 8 Billion/95% *100%         8,421,052,631.6 Target Fixed assets Sales Ratio = Fixed Assets/ Sales Target Fixed assets Sales Ratio = 1,300,000,000/8,421,052,631.6 Target Fixed assets Sales Ratio = 15.44% Target Fixed assets Sales Ratio = 15.44% Total Sales at 100% capacity = 8 Billion/95% *100%         8,421,052,631.6 Sales Increase by 12% (8,421,052,631.6*1.12)       9,431,578,947.37 15.44% = Fixed Assets / 9,431, 578,947.37 Fixed Assets = 1,456,235,789.47

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