Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the companys

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Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity.

a. What level of sales could Edney have obtained if it had been operating at full capacity?

b. What is Edney’s Target fixed assets/Sales ratio?

c. If Edney’s sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?

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Fundamentals of Financial Management

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Authors: Eugene F. Brigham, Joel F. Houston

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Question Posted: Oct 05, 2011 09:56 AM

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Edney Manufacturing Company has $2 billion in sales and $0.6 billion in fixed assets. Currently, the companys

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a Sales 2000000000 FA 600000000 FA are operated at 80 capacity Full capacity sales Actual sa...View the full answer

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