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 and B

Question

Quizplus · Accepted Answer

Both options A and B require adjustments when forecasting asset needs as a percent of sales. Option A (if assets must be purchased in large, discrete quantities) will require significant adjustments as the firm must have the funds to make a large purchase, and the purchase will have a significant effect on the balance sheet. Meanwhile, with option B (when the firm has excess capacity), the firm should not require additional assets to meet the forecasted sales, so adjustments will need to be made to prevent overinvestment in assets. Option C is not a valid choice because leasing would not have an impact on asset needs as a percent of sales.

Which of the Following Require Adjustments When Forecasting Asset Needs