A ﬁrm has sales of $650,969 and is operating at 83% capacity. The ﬁrm has total assets of $498,300 and current assets of $86,900. What is the capital intensity ratio at full capacity?
A) .52
B) .64
C) 1.04
D) 1.58
E) 1.92

Question

Quizplus · Accepted Answer

The capital intensity ratio is calculated as total assets divided by sales at full capacity. First, calculate the full capacity sales: $650,969 / 0.83 = $784,313.25. Then, the capital intensity ratio is $498,300 / $784,313.25 = 0.64.

A ﬁRm Has Sales of $650,969 and Is Operating at 83