Since and the firm's sales has been forecasted to increase by 10 percent for next year, its pro forma income statement and balance sheet for next year should indicate a growth of 10 percent in both sales and fixed assets from their current levels.

correct answer is American Tire is currently operating at its full capacity

Explanation:

given data

firm's sales increase by =  10 percent

growth in sales and fixed assets = 10 percent

solution

correct answer is American Tire is currently operating at its full capacity  because here it is a currently operating at full capacity that is increase in the sales that is require similar increase in the fixed asset

and when it is a operating at the excess capacity then lower increase in the fixed asset is require

and when it retains all income then lower increases in the fix asset is require.

so correct answer is is American Tire is currently operating at its full capacity

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