percentage-of-sales method

1. A widely used method of establishing an advertising budget based on a percentage of past, current, or future sales or profits. For example, a product producing 15% of sales would receive 15% of the advertising budget.
2. Projecting financial statements on the basis that many of the variables will remain at a fixed percentage of sales. For example, if sales are expected to increase 10% during the next year, the firm will have an additional 10% in inventories, receivables, and accounts payable.