>> Financial Management
1. Water and Power Co. (W&P) currently has $540,000 in total assets and sales of $1,820,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 21% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is:
2. W&P was using its fixed assets at only 94.00% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets?
3. When you consider that W&P’s fixed assets were being underused, its target fixed assets to sales ratio should be:
4. When you consider that W&P’s fixed assets were being underutilized, W&P must raise _____________ in additional fixed assets to support its expected sales next year.