Which One of the Following Statements Is True Concerning the Construction

question 75

Multiple Choice

Which one of the following statements is true concerning the construction of pro forma statements using the percentage of sales approach?

• A) The profit margin tends to vary considerably.
• B) The dividend dollar amount is held constant.
• C) Long-term debt is held as a constant percentage of sales.
• D) Retained earnings vary directly with sales.
• E) Inventory generally varies directly with sales.

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