Problem:
Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity.
Q1. What level of sales could Walter Industries have obtained if it had been operating at full capacity?
Q2. What is Walter's target fixed assets/sales ratio?
Q3. If Walter's sales increased 12%, how large of an increase in fixed assets would the company need in order to meet its target fixed assets/sales ratio?