Chapter 14 FIN

Chapter 14 FIN - Percent of sales method: a method of...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Percent of sales method: a method of financial forecasting that involves estimating the level of an expense, asset, or liability for a future period as a percent of the sales forecast. Spontaneous financing: the trade credit and other accounts payable that arise spontaneously in the firm’s day-to-day operations. Discretionary financing: Sources of financing that require an explicit decision on the part of the firm’s management every time funds are raised. An example is a bank note that requires that negotiations be undertaken, and an agreement signed setting forth the terms and conditions of the financing We can estimate the firm’s discretionary financing needs, using the percent of sales method of financial forecasting, by following a four- step procedure 1. Expressing Current Assets as a percentage of sales a. Current Assets/Sales 2. Project the level of each asset and liability account in the balance sheet using its percentage of sales multiplied by projected sales or by leaving the account balance unchanged when the account
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/30/2011 for the course FIN 3310 taught by Professor Potts during the Fall '08 term at Baylor.

Page1 / 2

Chapter 14 FIN - Percent of sales method: a method of...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online