Which One of the Following Is Correct in Relation to Pro

question 7

Multiple Choice

Which one of the following is correct in relation to pro forma statements?

• A) Fixed assets must increase if sales are projected to increase.
• B) Net working capital is affected only when a firm's sales are expected to exceed the firm's current production capacity.
• C) The addition to retained earnings is equal to net income less cash dividends.
• D) Long-term debt varies directly with sales when a firm is currently operating at maximum capacity.
• E) Inventory changes are not proportional to sales changes.

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