EBK FOUNDATIONS OF FINANCE
10th Edition
ISBN: 9780134897288
Author: PETTY
Publisher: VST
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Textbook Question
Chapter 14, Problem 2RQ
Discuss the shortcomings of the percent of sales method of financial
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Describe the short-comings of the percent of sales method of financial forecasting.
Explain the difference between the financial statement approach and the valuation approach. Which approach is superior for making short-term financial decisions? and why?
1. Discuss the other types of forecasting methods that financial analysts use to predict future revenues.
2. Are there any several other factors that may need to be considered that affects the sales forecast?
Chapter 14 Solutions
EBK FOUNDATIONS OF FINANCE
Ch. 14 - Prob. 1RQCh. 14 - Discuss the shortcomings of the percent of sales...Ch. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 1SPCh. 14 - Prob. 2SPCh. 14 - (Financial forecastingdiscretionary financing...Ch. 14 - (Financial forecastingpercent of sales) Next years...Ch. 14 - Prob. 5SPCh. 14 - (Percent of sales forecasting) Which of the...
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- What advantages does the forecasted financial statement method have over theAFN equation for forecasting financial requirements?arrow_forwardWhat happens with situations like Covid where we cannot predict future financials based on past performance metrics?arrow_forwardWhat is a question that should be asked about accounts payable when forecasting?arrow_forward
- In isolation, which of the following is TRUE about a financial ratio? Select one: a. Useful only for past performance b. Useful piece of information c. Useful only for future predictions d. Useless piece of informationarrow_forwardHow do you turn an income statement int a forecasted return? And how is it helpful?arrow_forward1.-The sales forecast is used as key information in the short-term financial planning process. True or False?arrow_forward
- Analyze the disadvantages of financial performance measures and the advantages of non-financial performance measures.arrow_forwardExplain the difference between deterministic and probabilistic financial planning models.arrow_forwardWhy does financial planning usually equated with projections?arrow_forward
- Give an example of a strength and a weakness of the accounting rate of return approach.arrow_forwardWhen preparing a projected income statement, which of the following additional information, other than the financial statements would probably not be relevant? a) Expected capital expenditure b) The competitive environment c) New versus old store mix d) Expected level of macroeconomic activityarrow_forwardWhat are some possible financial decisions in which using the Rate formula might be helpful?arrow_forward
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