When fixed assets on a pro forma statement are projected to increase at a rate equivalent to the projected rate of sales growth, it can be assumed that the firm is:

Question

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When fixed assets on a pro forma statement are projected to increase at a rate equivalent to the projected rate of sales growth, it suggests that the firm is currently operating at full capacity. This is because the firm needs to expand its fixed assets (such as property, plant, and equipment) in order to support additional sales, indicating that it does not have excess capacity to accommodate growth without expanding its asset base.

When Fixed Assets on a Pro Forma Statement Are Projected