According to the forecasting and control function, if a firm cannot obtain the funds required to meet the sales forecast, then it should _____.
A) plan for the acquisition of required funds well in advance
B) scale back the projected level of operations
C) expand its production facilities
D) build up its inventory quickly
E) reformulate its plans to increase retained earnings

Question

Quizplus · Accepted Answer

If a firm cannot obtain the funds required to meet the sales forecast, then it should scale back the projected level of operations. This means that the firm should reduce its sales forecast to a level that can be supported by the available funds. Planning for the acquisition of required funds well in advance is ideal, but if the funds are not available at the time of need, then scaling back operations is the best immediate solution. Expanding production facilities, building up inventory quickly, or reformulating plans to increase retained earnings are not viable options when the firm is facing a shortage of funds.

According to the Forecasting and Control Function, If a Firm