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1. Based on of the percent of sales method, if the cost of goods sold has averaged 65% of sales over the past several years, and the sales are expected to be $20 million next year, our cost of goods forecast would be $6.5 million.

2. The regression tool of Excel is in the Analysis ToolPak add-in.

3. The top-down method of forecasting sales involves discussions with customers to determine the expected demand for each product and expectations regarding prices, which are then used to create a firm-wide sales forecast.

4. The percent of sales method requires to ask the following question for each item of the financial statements: Is it likely that this item on the financial statements will change proportionally with total assets?

5. Accrued expenses is a spontaneous source of financing.

6. To run the regression tool after adding the Analysis ToolPak add-in of Excel, click the Data Analysis button on the Data tab, and select Regression from the list of analysis tools that are available.

7. The difference between total assets and total liabilities and owners equity is referred to as discretionary financing needed (DFN, also called additional funds needed or required new funds).

8. Generally speaking, changes in spontaneous sources of financing will not have a direct relationship with changes in sales.

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