Question

4. Excess capacity adjustments Monk Consortium Corp. (Monk-Con) currently has $540,000 in total assets and sales of $1,400,000. Half of Monk-Con's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is Monk-Con was using its fixed assets at only 96% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,458,333 $1,604,166 $1,750,000 $1,166,666 When you consider that Monk-Con's fixed assets were being underused, its target fixed assets to sales ratio should be

Answer 1

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BOND - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Dr General Wrap Text Merge & Center - Σ AutoSum : A Fill 2 Sort & m Find & 8. File Home Insert Page Layout Formulas Data Review % Cut Calibri -11AA = = = Ea Copy Paste Format Painter B I U - D. A Clipboard Font S760 O P Q $ - % Number Formatting as Table Styles Styles 2 Clear Filter Editing Select Alignment Cells R. V W X 744 ANS 1 AS PER AFN EQUATION = INCREASE IN ASSETS = 540000 X 22% = 118800 745 746 747 748 749 CURRENT SALES AT 96 % CAPACITY 1400000 270000 FIXED ASSETS = HALF OF TOTAL ASSETS 750 ANS 2 SALES AT CURRENT LEVEL OF FIXED ASSETS 1458333 (1400000 X 100/96] 751 752 753 754 755 756 ANS 3 TARGET FIXED ASSETS TO SALES RATIO 18.51% [270000/1458333] 757 NEXT YEAR SALES FIXED ASSETS REQUIRED ADDITIONAL FIXED ASSETS REQUIRED = 316224 - 270000 = 1708000 (1550000 X 1.18] 316224 [1708000 X 18.51%] 46224 758 ANS 4 759 760 761 762 H Rea AFN BANKING NOTE 51 53 CLEAN PRICE 510 BIDDING, UNDERWRITING EUAC AW LIFELP, IP, MRP, INFLATION WARRANT refund 55 YIELD SPOT Sheet2 ferences: 1198 54 BO 56 I 130% - O- _ + 2. 9 * 4OENG 28-11-2019