4. Excess capacity adjustments Aa Aa Water and Power Co. (W&P) currently has $645,000 in...
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4. Excess capacity adjustments Aa Aa Water and Power Co. (W&P) currently has $645,000 in total assets and sales of $1,790,000. Half of W&P's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 20% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is W&P was using its fixed assets at only 93% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,924,731 O $1,636,021 $1,539,785 O $2,309,677 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? O $44,892 O $29,928 $37,410 O $31,799
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