Question
Why do we need different code for the future forecast years (after the first one) for Sales Growth vs. Days Payable Outstanding? Group of answer
Why do we need different code for the future forecast years (after the first one) for Sales Growth vs. Days Payable Outstanding?
Group of answer choices
Because these are calculated and presently differently. Sales is calculated using a growth rate and is presented/used as a percentage, while Days Payable Outstanding is calculated based on sales and is presented/used as the number of days that it takes to make payments to suppliers.
Because the two have different effects on cash flow. Sales has a positive impact on cash flow, while Days Payable outstanding has a negative impact.
Because we always want to lower the Days Payable outstanding, regardless of the analysis we are conducting, but we may want to analyze and increase or decrease in sales growth.
Because these assumptions are used on difference sheets (Income Statement vs. Balance Sheet).
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