When using a percent of sales method for forecasting, which is the most important variable to estimate?
A)COGS
B)Inventory
C)Revenue
D)Bank debt

Question

Quizplus · Accepted Answer

When using a percent of sales method for forecasting, the most important variable to estimate is revenue. This method involves estimating future sales and then using a percentage of those sales to forecast other financial factors such as costs, expenses, and profits. Therefore, revenue is critical in this approach as it serves as the starting point for all other predictions. COGS and inventory are also important, but they are dependent on the level of revenue. Bank debt is not directly relevant to this method as it is a financing item, not an operational one.

When Using a Percent of Sales Method for Forecasting, Which