The chief financial officer of AJAX Industries expects sales to increase from $8,000,000 in 2010 to $12,000,000 in 2011.Current assets in 2010 are equal to $5,000,000.Using the percent of sales method,projected current assets for 2011 are equal to

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The percent of sales method assumes that current assets will increase in proportion to sales. The sales increase from $8,000,000 to $12,000,000, which is a 50% increase. Therefore, current assets will also increase by 50%, from $5,000,000 to $7,500,000.

The Chief Financial Officer of AJAX Industries Expects Sales to Increase