Jasper Companies has a capital intensity ratio of.8 at full capacity. Currently, total assets are $76,900 and current sales are $88,800. At what level of capacity is the firm currently operating?

Question

Quizplus · Accepted Answer

The capital intensity ratio is the ratio of total assets to sales at full capacity. Given the ratio is 0.8, full capacity sales would be $76,900 / 0.8 = $96,125. The current sales are $88,800, so the firm is operating at $88,800 / $96,125 = 92% capacity.

Jasper Companies Has a Capital Intensity Ratio Of