What is williamson target fixed assets or sales ratio

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Reference no: EM132210852

Question - Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $3 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 6%.

Assume that the company pays no dividends.

Under these assumptions, what would be the additional funds needed for the coming year?

Williamson Industries has $5 billion in sales and $2 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity.

What level of sales could Williamson Industries have obtained if it had been operating at full capacity?

What is Williamson's target fixed assets/sales ratio?

If Williamson's sales increase 12%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?

Reference no: EM132210852

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