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9 November, 02:49

Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set

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Answers (1)
  1. 9 November, 05:13
    0
    16%

    Explanation:

    The computation of the target fixed assets sales ratio is shown below:

    As we know that

    Target Fixed asset - Sales ratio is

    = Fixed Assets : Full Capacity Sales

    where,

    Fixed assets is $100 million

    And the full capacity sales is

    = $250 million * 40%

    Now putting these values to the above formula

    So, the target fixed asset sales ratio is

    = $100 million : $250 million * 40%

    = 16%
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Home » Business » Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity.
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