Q: Why does the process of generating forecasts of Future Financial Statements for a new product venture generally start with forecasting the Sales line? (more than one answer could be correct)
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Q: Why is projecting the sales line typically the first step in creating future financial statement estimates for a new product venture? (More than one response may be accurate.)
- Because Sales Revenues are the biggest numbers on the Income Statement
- Because Sales measures the profitability of the product venture
- Because many of the other business activities are determined based on forecasted volumes of sales
- Because Sales is the easiest line item to forecast in a new product venture
Explanation: Sales forecasts impact key elements like production, costs, inventory, and other operational decisions, making it essential to start here. Sales drive the overall size of the financial statement, so they serve as the foundation for estimating costs, profitability, and cash flows.
