Roy and Flo's Flowers has $1,300 of sales and $1,755 of total assets. The ﬁrm is operating at 80 percent of capacity. What is the capital intensity ratio at full capacity?

Question

Quizplus · Accepted Answer

The capital intensity ratio at full capacity is calculated as total assets divided by full capacity sales. Since the firm is operating at 80% capacity, full capacity sales would be $1,300 / 0.80 = $1,625. The capital intensity ratio is then $1,755 / $1,625 = 1.08.

Roy and Flo's Flowers Has $1,300 of Sales and $1,755