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Assets, Accounts Payable and Costs Are Proportional to Sales

Question 105

Multiple Choice

Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 10% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 88% of capacity. What is the required increase in net fixed assets? A) $0 B) $176 C) $281 D) $312 E) $520 Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 10% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 88% of capacity. What is the required increase in net fixed assets? A) $0 B) $176 C) $281 D) $312 E) $520 Assets, accounts payable and costs are proportional to sales. Debt and equity are not.
The sales of Douglass Enterprises are expected to increase by 10% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 88% of capacity. What is the required increase in net fixed assets?


A) $0
B) $176
C) $281
D) $312
E) $520

Correct Answer:

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