A Firm Has Targeted a 40% Growth in Sales This

question 7

Multiple Choice

A firm has targeted a 40% growth in sales this year.Last year's cash as a percent of sales was 15%,accounts receivable 30%,and inventory 35%.What percentage growth in current assets is required to support the growth in sales under the percent-of-sales forecasting method?

• A) 32%
• B) 26%
• C) 18%
• D) Not enough information to tell.

---

Definitions:

Consumers

Individuals or groups that purchase goods and services for personal use.

Service Company

A business entity that provides professional services or expertise instead of physical goods.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.

Merchandise

Goods that are bought and sold in business transactions, often referred to in the context of retail or wholesale trading.