Chemical manufacturer DuPont has approximately $0.68 in assets for every dollar in sales. According to asset intensity, for every $100 increase in sales, the firm would need about $68 of additional assets.

Question

Quizplus · Accepted Answer

This statement accurately reflects the concept of asset intensity, which measures the amount of assets required to generate a given level of sales. A high asset intensity indicates that a company requires significant investments in assets to maintain its revenue, whereas a low asset intensity suggests that a company can generate sales without requiring large amounts of capital. In this case, DuPont's asset intensity is 0.68, meaning that for every dollar of sales, the company has $0.68 in assets. Therefore, for every $100 increase in sales, the firm would need about $68 of additional assets to support that growth.

Chemical Manufacturer DuPont Has Approximately $0