# Solved > 18.2   Forecasting Financial Statements: The Percent of Sales:1587185 …

18.2   Forecasting Financial Statements: The Percent of Sales Method

1) Forecasting a balance sheet with percent of sales method requires two passes?a first pass to determine financing needs and a second pass that shows the sources and amounts of financing.

2) The ________ method assumes that as sales grow, many income statement and balance sheet items will grow, remaining the same percent of sales.

A) percent of income

B) percent of liabilities

C) percent of sales

D) percent of assets

3) While the assets and accounts payable of a firm may reasonably be expected to grow with sales, ________ will not naturally grow with sales.

A) cash

B) supplier credit

C) long term debt

D) cost of sales

4) Which of the following accounts may reasonably be expected to grow with sales:

I Accounts Receivable

II Accounts Payable

III Property, Plant and Equipment

IV Inventory

V Long-Term Debt

A) I, II, and III

B) I, II, and V

C) I, II and IV

D) III and V

5) Calgary Doughnuts had sales of \$200 million in 2007. Its cost of sales were \$160 million. If sales are expected to grow at 10% in 2008, compute the forecasted costs using the percent of sales method.

A) \$160 million

B) \$170 million

C) \$173 million

D) \$176 million

6) Calgary Doughnuts had sales of \$100 million in 2007. Its cost of sales were \$70 million. If sales are expected to grow at 20% in 2008, compute the forecasted costs using the percent of sales method.

A) \$80 million

B) \$84 million

C) \$88 million

D) \$96 million

7) Calgary Doughnuts had sales of \$300 million in 2007. Its cost of sales were \$200 million. If sales are expected to grow at 15% in 2008, compute the forecasted costs using the percent of sales method.

A) \$210 million

B) \$215 million

C) \$225 million

D) \$230 million

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