KT Industries Is Operating at Full Capacity with a Sales

question 350

Multiple Choice

KT Industries is operating at full capacity with a sales level of $989,400 and fixed assets of $574,600. What is the required addition to fixed assets if sales are to increase by 14%?

• A) $58,072
• B) $60,333
• C) $80,444
• D) $116,144
• E) $138,516

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, particularly considered when assessing its liquidity.

Cash Budget

An estimation of the cash inflows and outflows for a business or individual for a specific period, used for managing liquidity and financial planning.

Working Capital Policy

A company's strategy concerning managing its current assets and liabilities to ensure it has sufficient liquidity to meet its short-term obligations.

Factoring Accounts Receivable

A financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.