1. Answer the following questions regarding financial forecasting:

a. Which items comprise operating current assets? Why is it reasonable to assume that they grow

proportionally to sales or COGS? Which ones are proportional to sales and which ones are

proportional to COGS? Explain

b. What are some reasons that net PP&E might grow proportionally to sales, and what are some

reasons that it might not?

c. What are spontaneous liabilities and why is it reasonable to assume they grow at proportion of

sales or COGS? What are spontaneous liabilities also known as (in fact, we used this alternate

name in previous modules)? What are the most common examples of spontaneous liabilities?