Question

Dave has been suggested to assume his firm is operating at full capacity and its net fixed assets can be added by any amount. Thus, he makes its ____________________ in his construction of the pro forma balance sheet of the firm. a. net fixed assets vary proportionally with salesb. net fixed assets vary only if the firm is producing at less than full capacityc. net fixed assets vary only if the firm maintains a fixed debt-equity ratiod. net fixed assets remain fixede. net fixed assets vary only if the firm is currently producing at full capacit

Answer 1

Answer:

Net Fixed Assets remains fixed

Explanation:

The reason is that the company will not desire to increase its investment if the net fixed Assets does not increases the production capacity so the net fixed assets will remain the same for period. The depreciation will be the same for the year required it is not production dependant. Net fixed assets also doesn't changes with the changes in production and debt to equity level. It remains fixed for the period.