Ausel's Cabinets Has $27,600 in Net Fixed Assets and Is

question 84

Multiple Choice

Ausel's Cabinets has $27,600 in net fixed assets and is operating at 96 percent of capacity. Sales are $36,200 currently. What is the required increase in fixed assets if sales are projected to increase by 14 percent?

• A) $4,205
• B) $3,400
• C) $6,833
• D) $0
• E) $2,605

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Definitions:

Liquidity Ratios

Ratios that measure the speed with which a company can turn its assets into cash to meet short-term debt.

Current Liabilities

Short-term financial obligations that a company is required to pay within a year, including accounts payable, wages, and other debts.

Debt Utilization Ratio

A financial metric that measures the proportion of a company's credit usage to its available credit, indicating its debt management efficiency.