All else equal, which of the following is the most likely to occur if actual sales are much less than forecasted sales?
A) The company will be in a better position to pay down most of its debt.
B) The firm's actual investment in inventory will be unchanged from the amount forecasted.
C) Accounts receivable will rise significantly above the forecast.
D) The company might face a cash flow crunch.

Question

Quizplus · Accepted Answer

If actual sales are much less than forecasted sales, the company might not have enough cash to pay for its operating expenses, which can lead to a cash flow crunch. This means that the company may struggle to meet its financial obligations, such as paying employees, suppliers, and lenders. Therefore, D is the most likely outcome in this scenario.choices A, B, and C are unlikely to occur because they suggest positive financial outcomes, and actual sales being much less than forecasted sales may lead to negative financial outcomes.

All Else Equal, Which of the Following Is the Most