A Firm That Only Utilises 40% of Its Fixed Assets

question 80

True/False

A firm that only utilises 40% of its fixed assets capacity to generate R1,000,000 in sales will be able to increase sales to R4,000,000 before full capacity is reached and plant and equipment would have to be increased.

---

Definitions:

Noncash Asset

An asset that is not in the form of cash and can include things like real estate, vehicles, equipment, and intellectual property.

Fair Value

An appraisal of the market value of an asset or liability, reflecting the price it could be sold for or the payment required to assume the liability, within a structured exchange involving market actors.

Nominal Amount

The face value of a bond or other financial instrument, as distinct from its market value or purchase price.

Underwrites

The process of assessing and assuming the risk of another party, often used in the context of insurance policies or issuing of securities.