Question: Question uploaded via image Last year, Jain Technologies had $250 million of sales and $100 million of fixed assets, so its FA/sales ratio was 40

Question uploaded via image

Question uploaded via image Last year, Jain Technologies had $250 million of

Last year, Jain Technologies had $250 million of sales and $100 million of fixed assets, so its FA/sales ratio was 40 percent. However, its fixed assets were used at only 75 percent of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target fixed assets/sales ratio at the level it would have had had it been operating at full capacity. What target FA/sales ratio should the company set? ANSWER Sales Fixed asset % of capacity utilized Sales at full capacity = Actual sales/% of capacity used = S _____ Target FA/sales ratio = Full capacity FA/capacity sales = _____ % Spreadsheet solution: Sales Fixed assets % of capacity utilized Sales at full capacity #DIV/0! Target fixed assets/sales ratio #DIV/0

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