Delta Products utilizes the percentage of sales approach to ﬁnancial planning. Which one of the following accounts will the ﬁrm have to estimate ﬁrst under this approach?

Question

Quizplus · Accepted Answer

The percentage of sales approach to financial planning requires the firm to estimate sales first in order to determine the expected revenues for the period. Once sales are estimated, the firm can then estimate the costs associated with generating those revenues, such as the cost of goods sold, inventory, and fixed assets. Meanwhile, long-term debt is not affected by the level of sales and therefore would not be estimated as part of this approach.

Delta Products Utilizes the Percentage of Sales Approach to ﬁNancial