What are the advantages and disadvantages of the percent-of-sales method?

Answer

The percent of sales method is when expenses or revenues are considered as percentages of sales. Advantages include having a relatively handy method of determining income and gauging profitability. Disadvantages include the inability of this method to accurately predict future financial health, as there are many other factors to consider. Current sales may be temporarily inflated in regards to cost, depending on how the industry cycles.
Q&A Related to "What are the advantages and disadvantages of..."
The advantage of the percent of sales method is that you have a modeled percentage of previous activity and company growth in terms of creating a marketing budget. The disadvantage
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1. Subtract your costs from your total sales to find your profit. For example, if you have sales of $230,000 and costs of $180,000, subtract $180,000 from $230,000 to get $50,000
http://www.ehow.com/how_8140334_calculate-profit-p...
The one I use is called the "Five Whys" technique. Like it's name suggests, you're just asking your prospect "Why?" until you've dug deep enough and found what
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Well, first of all, percent of sales assumes that you are always operating at full capacity. It doesn't take into account fixed costs in the event of underutilized resources - it
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