Which of the following require adjustments when forecasting asset needs as a percent of sales?
A) If assets must be purchased in large, discrete quantities
B) When the firm has excess capacity.
C) When assets can be leased rather than purchased.
D) Both A & B.

Question

Quizplus · Accepted Answer

Option A is true because if assets must be purchased in large, discrete quantities, this may impact the timing and amount of asset needs as a percent of sales. Option B is also true because if the firm has excess capacity, it may not need to purchase additional assets even if sales increase, which would affect the forecasted asset needs as a percent of sales. Option C is not relevant since forecasting asset needs as a percent of sales assumes that assets will be purchased and not leased. Therefore, the correct answer is both A & B.

Which of the Following Require Adjustments When Forecasting Asset Needs