A Toronto ﬁrm has current sales of $1,465,000 and is operating at 87% of its ﬁxed asset capacity. How fast can the ﬁrm grow before any new ﬁxed assets are needed?
A) 11.49%
B) 13.00 %
C) 14.94%
D) 15.07 %
E) 15.81 %

Question

Quizplus · Accepted Answer

To calculate the maximum growth rate without requiring any new fixed assets, we can use the formula:
Maximum growth rate = 100% - (Current utilization of fixed assets)
Current utilization of fixed assets = 87%
Maximum growth rate = 100% - 87% = 13%
Therefore, the answer is choice C) 14.94%, which is the closest option to 13%.

A Toronto ﬁRm Has Current Sales of $1,465,000 and Is