Solution-Percent of sales model, The percent of sales model

Percent of sales model

Reference no: EM131627206

Topic 1 - Financial Planning

The percent of sales model uses historical information to develop certain ratios such as sales to inventory or finished products, sales to debtors/receivables, and sales to cash. Sales are then forecasted based on the ratios. The percent of sales model is a financial planning model that assumes that most income statement and balance sheet accounts vary proportionally with sales. This model has a weakness related to working capital. What is this weakness and how does it affect financial planning?

Reference no: EM131627206

Questions Cloud

How good management of change-over-set-up brings benefits : Using examples show how good management of "change-over/set-up" brings benefits to the company.

Evaluate the return relative to its current income : Mary and Nick Stalcheck have an investment portfolio containing four investments. It was developed to provide them with a balance between current income.

Provide advice for an organic cigarette firm : You are asked to provide advice for an organic cigarette firm.

Identify and assess at least three professional skills : Information professionals with adequate skills are required to maintain the business continuity of database services in an organization.

Percent of sales model : The percent of sales model is a financial planning model that assumes that most income statement and balance sheet accounts vary proportionally with sales.

The level of integration of operations with other parts : The level of integration of operations with other parts of the company can be crucial for its success.

Select at least three security vulnerabilities : Describe how often these measures should be performed and the order in which each should be performed.

Percentages for different line items : In a pro forma income statement, why would a finance manager make changes in the prior year's percentages for different line items?

Describe the actions antonio should take to rebalance : Antonio Cassini is using a constant-ratio plan to rebalance his portfolio. He has 300 shares of an aggressive growth stock priced at €50 (Euro).

User Account

All Pages

Percent of sales model

Reference no: EM131627206

Reference no: EM131627206

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

How does a stockholder define the total value of a firm and

Calculate the NPV of the project

How much of each kind of ingredient would be in a single

Find the stock price at the end of three years

Advantages of dynamic pricing over fixed pricing

Contracting and regulatory incentive

Compute the percentage increase in these earnings

Description of revenue cycle management

What is the cost of one contract

Explain market value of equity

What was the total cost to firm of issuing the securities

What function does money play for dash

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT