Osato Chemicals Inc. currently has $540,000 in total assets and sales of $1,720,000. Half of Osatos total
Question:
Osato Chemicals Inc. currently has $540,000 in total assets and sales of $1,720,000. Half of Osato’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 $ ________.
Osato was using its fixed assets at only 93% of capacity last year. How many sales could the firm have supported last year with its current level of fixed assets?
a.) $1,479,570
b.) $1,756,989
c.) $2,219,354
d.) $1,849,462
When you consider that Osato’s fixed assets were being underused, its target fixed assets to sales ratio should be _________ %.
When you consider that Osato’s fixed assets were being underused, how much fixed assets must Osato raise to support its expected sales for next year?
a.) $33,831
b.) $40,597
c.) $32,139
d.) $27,065
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker