Last Year Jain Technologies Had $250 Million of Sales and $100

question 10

Multiple Choice

Last year Jain Technologies had $250 million of sales and $100 million of fixed assets,so its FA/Sales ratio was 40%.However,its fixed assets were used at only 75% of capacity.Now the company is developing its financial forecast for the coming year.As part of that process,the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity.What target FA/Sales ratio should the company set?

• A)28.5%
• B)30.0%
• C)31.5%
• D)33.1%

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, with voting rights and potential for dividends.

Stated Value

A value assigned to no-par value stock by the board of directors of a company and used for accounting purposes.

Paid-In Capital in Excess of Par

The amount received by a company from selling its shares above their par value.

Organizational Expenses

Costs incurred during the formation of a corporation or organization, such as legal fees and registration charges.