Which of the following is NOT a step in the financial forecasting process when using the percent of sales method?

Question

BlackTom AI · Accepted Answer

Question restatement: Which of the following is NOT a step in the financial forecasting process when using the percent of sales method?

Option 1: Project sales revenues and expenses. This is a core part of the percent of sales method, since future revenues and costs are driven by projected sales and the method uses these targets to build the forecast. Therefore, this option describes a valid step.

Option 2: Deal with discretionary accounts. In forecasting, discretionary (or non-spontaneous) accounts must be analyzed and sometimes adjusted to account for financing needs and strategic decisions. Handling discretionary items is part of forming a complete forecast, so this is a legitimate step.

Option 3: Calculate retained earnings. Retained earnings are tied to net income and the payout/retention policy, which feeds into equity and the sustainable financing picture. Computing retained earnings is typically included in the forecasting process, making this a valid step.

Option 4: Determine the sustainable growth rate. The sustainable growth rate (SGR) is a metric that expresses how fast the firm can grow using internal financing while keeping leverage and payout policies constant. It is a concept or outcome derived from the forecast rather than a procedural step in building the forecast itself. This is the element that is not a direct step in the percent of sales forecasting process.

Option 5: Forecast change in spontaneous balance sheet accounts. Spontaneous accounts (such as accounts receivable, accounts payable, and other naturally changing items) are explicitly forecast under the percent of sales approach, so this is indeed a step.

Summary: The options that describe actual steps in building the forecast include projecting sales and expenses, handling discretionary items, calculating retained earnings, and forecasting spontaneous balance sheet changes. The sustainable growth rate is a derived metric, not a forecasting step, which makes Option 4 the correct choice. (Note: The specific correct option per the provided data is: 'Determine the sustainable growth rate.')

MSB-250-300-002 Proctored Midcourse Exam 1

Which of the following is NOT a step in the financial forecasting process when using the percent of sales method?

查看解析

登录即可查看完整答案

类似问题

Which of the following is not a step in the Percent of Sales forecasting method?

What is the main goal of financial forecasting?

The purpose of financial forecasting can best be described as an answer to which of the following questions?

When forecasting a targets financial outlook, we seek to develop estimates for all but

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单