Question: Excess Capacity

Walter industries has $5 bill in sales and $1.7 bioll in fixed assets. Currently, the company’s fixed assets are operating at 90% of capacity.

a. what level of sales could walter industores have obtained if it had been operating at full capacity?

b. What is Walter’s target fixed assets/sales ratio?

c. If Walter’s sales increase 12%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?