Question

3. Excess capacity adjustments Western Gas & Electric Co. (WG&E) currently has $540,000 in total assets and sales of $1,550,000. Half of WG&E's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 19% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ WG&E was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? $1,631,579 $1,876,316 $1,713,158 O $1,794,737 When you consider that WG&E's fixed assets were being underused, its target fixed assets to sales ratio should be %. When you consider that WG&E's fixed assets were being underused, how much fixed assets must WG&E raise to support its expected sales for next year? $40,520 O $35,235 $36,997 $38,759

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

- 2x Y 688 BOND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Σ AutoSum : A Calibri -11AA = = = Dr Wrap Text General Ea Copy Fill 2 m Paste B I U B- A Format Painter Merge & Center - $ -% . Conditional Format Cell Insert Delete Format Sort & Find & Formatting as Table Styles Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing U701 - five 2 O P Q R T U V W X 682 683 684 WESTERN 685 686 ANS 1 AS PER AFN EQUATION = INCREASE IN ASSETS = 540000 X 19% = 102600 687 CURRENT SALES 1550000 689 AT 95 % CAPACITY FIXED ASSETS = HALF OF TOTAL ASSETS 270000 690 ANS 2 SALES AT CURRENT LEVEL OF FIXED ASSETS 1631579 (1550000 X 100/95) 692 693 694 ANS 3 TARGET FIXED ASSETS TO SALES RATIO 16.55% [270000/1631579] 695 696 NEXT YEAR SALES 1844500 (1550000 X 1.19] 697 FIXED ASSETS REQUIRED 305235 (16.55% X 1844500] 698 ANS 4 ADDITIONAL FIXED ASSETS REQUIRED - 305235-270000 = 35235 699 700 701 702 HEM YIELD SPOT Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE $10 BIDDING, UNDERWRITING EUAC AW LIFELP, IP, MRP, INFLATION WARRANT refund 54 55 56 0 Rea ferences: FY395 OU 120% DOER 9 * 691 0 ENG 25-11-2019)