Question

Describe the percentage of sales method and briefly explain why it is used widely.

Answer 1

Percentage of sales method is a highly futuristic method in which it is estimated that how much more finance is needed to increase the overall sales of the company in the future.

Percentage of sales method is highly used in budgeting of revenues by various companies and it is used to a very high extent because it is futuristic in nature and various financing methods are properly analysed and assessed which will be incorporated in the structuring of the overall business of the company in order to maximize the rate of return on the sales so it will always be deciding upon the nature of the financing and the type of the financing which will be incorporated in the company structure in order to boost sales in the future and it is always used for forecasting futuristic sales.

Futuristic cells are forecasted by the percentage of the sales method by determination of the historical correlation and the past performance of the company and finding out the nature of relationship of sales with the financing involved.

It is a quick method and it will help in forecasting the futuristic sales so these methods of percentage of sales is highly required in the budgeted sales figure and it is considered a highly reliable method.