Assume that Calamar Corp.has sales of $7.5 million and accounts payable of $450,000.The corporation utilises the percent-of-sales method of financial forecasting.If Calamar is expected to generate sales of $9 million next year,what will the firm's accounts payable be?

Question

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Using the percent-of-sales method, accounts payable is expected to increase proportionally with sales. The increase in sales is from $7.5 million to $9 million, which is a 20% increase. Therefore, accounts payable will also increase by 20%: $450,000 * 1.20 = $540,000.

Assume That Calamar Corp