Calculate the projected ﬁxed assets needed given the following information: current sales = $1,000; current sales capacity = 90%; current ﬁxed assets = $1,800; projected future sales = $1,250.

Question

Quizplus · Accepted Answer

To find the projected fixed assets needed, first calculate the sales capacity ratio: $1,000 / 0.9 = $1,111.11. Then, find the fixed asset turnover ratio: $1,111.11 / $1,800 = 0.617. Finally, calculate the projected fixed assets: $1,250 / 0.617 = $2,025.

Calculate the Projected ﬁXed Assets Needed Given the Following Information