Which of the Following Statements Is Correct

question 35

Multiple Choice

Which of the following statements is correct?

• A)The most important step when developing pro forma financial statements is to determine the breakdown of common equity between common stock and retained earnings.
• B)The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales.
• C)In a financial plan, the way that liabilities and owner's equity are projected to change depends on the firm's sales forecast.
• D)The capital intensity ratio gives us an idea of the physical condition of the firm's fixed assets.

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Definitions:

Consumer Price Index

An indicator that assesses the typical shift through time in the expenses urban purchasers face for a predetermined array of consumer items and services.

Inflation Rate

The percentage increase in the general level of prices for goods and services over a period.

Consumer Price Index

A measure of the average shift in costs for various consumer items and services bought by urban dwellers, the Consumer Price Index reveals how these prices change over time.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy in a year.