Pro Forma Statements

question 62

Multiple Choice

Pro forma statements:

• A) must assume that no new equity is issued.
• B) are projections, not guarantees.
• C) are limited to a balance sheet and income statement.
• D) must assume that no dividends will be paid.
• E) exclude net working capital needs.

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been sold to customers.

Direct Labor-Hours

The cumulative hours that employees, who are actively engaged in the production process or delivering a service, put in.

Raw Materials Cost

The total cost associated with acquiring raw materials that are necessary for manufacturing goods.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.