A Firm Has Targeted a 20% Growth in Sales This

question 69

Multiple Choice

A firm has targeted a 20% growth in sales this year. Last year's cash as a percent of sales was 10%, accounts receivable 30%, and inventory 25%. What percentage growth in current liabilities is required to support the growth in sales under the percent-of-sales forecasting method?

• A) 32%
• B) 13%
• C) 8%
• D) Not enough information to determine

---

Definitions:

Third Party Payors

Entities (usually insurance companies or government agencies) that pay for healthcare services on behalf of patients.

Contractual Adjustments

Adjustments made to the gross amount of charges for services provided, primarily in healthcare, based on pre-negotiated agreements with payers or insurers.

Amounts Pledged

The values of assets that have been promised as security for a loan or obligation.

Uncollectible

Accounts receivable that cannot be recovered and are therefore written off as a loss.