Unformatted text preview: 8.33 11.00 Inventory/Sales 12.0% 9.09% SGA/Sales 35.0% 33.0% Outputs AFN $187.2 $15.7 FCF -$150.0 $33.5 ROIC 6.7% 10.8% ROE 8.5% 12.3% j. Suppose you now learn that SEC’s 2007 receivables and inventories were in line with required levels, given the firm’s credit and inventory policies, but that excess capacity existed with regard to fixed assets. Specifically, fixed assets were operated at only 75 percent of capacity. j. 1. What level of sales could have existed in 2007 with the available fixed assets? Answer: Full Capacity Sales = operated were assets fixed at which capacity of % sales Actual = 75 . 000 , 2 $ = $2,667. Since the firm started with excess fixed asset capacity, it will not have to add as much fixed assets during 2008 as was originally forecasted....
View Full Document
- Spring '08
- Balance Sheet, Generally Accepted Accounting Principles, inventory turnover ratio, available fixed assets, industry average figures