Which Is the Recommended Way to Forecast Items Such as Inventory

question 1

Multiple Choice

Which is the recommended way to forecast items such as inventory and accounts payable?

• A)Inventory and accounts payable should be forecasted based on revenues,since most other working capital items are forecasted based on revenues.
• B)Inventory and accounts payable should be forecasted based on COGS,because these items are more correlated with input prices than with output prices.
• C)Inventory and accounts payable should be the plug once total operating assets and operating liabilities have been forecasted.
• D)Inventory and accounts payable should be forecasted based on total assets,as these tend to scale together.

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Definitions:

Cause-and-Effect

A relationship where one event (the cause) makes another event happen (the effect).

Dependent Variable

In experimental research, it's the outcome or response that is measured to assess the effect of the independent variable.

Test Scores

Quantitative measurements derived from educational or psychological tests designed to assess various aspects of knowledge, skills, abilities, or performance.

Negatively Correlated

A relationship between two variables in which one variable increases as the other decreases.