When Utilizing the Percentage of Sales Approach,managers

question 60

Multiple Choice

When utilizing the percentage of sales approach,managers:
I.estimate company sales based on a desired level of net income and the current profit margin.
II.consider only those assets that vary directly with sales.
III.consider the current production capacity level.
IV.can project both net income and net cash flows.

• A)I and II only
• B)II and III only
• C)III and IV only
• D)I, III, and IV only
• E)II, III, and IV only

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Definitions:

Inventory Turnover

A ratio indicating how often a company's inventory is sold and replaced over a period, highlighting efficiency in managing stock and sales.

Grocery Store

A grocery store is a retail establishment that specializes in selling food and other household goods.

Accounts Receivable Turnover

A financial ratio that measures how many times a company collects its average accounts receivable in a period.

Sales

The total amount of goods or services sold by a company, serving as a primary source of revenue.