Balance sheet using percentage of sales forecasting method

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Reference no: EM131924020

1. LG has done a forecast of its balance sheet using the percentage of sales forecasting method. Total assets are expected to increase from $200 million this year to $250 million next year. If the accounts payable balance is $10 million this year, what will the projected accounts payable balance be at the end of next year?

A) $12.5 million

B) not enough information is provided

C) $25.0 million

D) $10.0 million

E) $12.0 million

2. A firm had net income of $200 million and paid out $100 million in dividends last year. Next year, the firm projects net income of $250 million and maintaining the same dividend payout ratio as last year. Under the percentage of sales forecasting method, what is the forecasted increase in retained earnings for next year?

A $250 million

B not enough information is provided

C $100 million

D $150 million

E $125 million

Reference no: EM131924020

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