By Compiling Pro Forma Statements, fiRms Can

question 353

Multiple Choice

By compiling pro forma statements, firms can:

• A) Ensure that their anticipated rate of growth will in fact occur.
• B) Avoid increasing their level of financial leverage while still increasing the growth rate of the firm.
• C) See the projected effects of their planned activities.
• D) Determine how to grow at a rate that exceeds their sustainable rate of growth without increasing their equity financing.
• E) Reduce the daily level of management involvement in the operations of the firm.

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Definitions:

Mental Picture

The act of visualizing something in the mind’s eye, forming a visual image.

Waist Circumference

A measurement around the smallest area of the waist, used as an indicator of health risks associated with obesity.

Health Problems

Issues affecting the physical or mental health and well-being of an individual.

Percent Body Fat

The proportion of a person's mass that is made up of fat, compared to lean mass, often used as an indicator of fitness.