When Constructing Pro Forma Financial Statements, Which of the Following

question 37

Multiple Choice

When constructing pro forma financial statements, which of the following steps should be completed first?

• A) Forecast next period's statement of financial position.
• B) Determine the additional funds needed, AFN, to support expected growth.
• C) Forecast next period's statement of comprehensive income.
• D) Consider the impact of external financing on the additional funds needed (AFN) to determine how much additional interest or dividends must be paid to support expected growth-that is, consider financing feedbacks.
• E) Determine whether the firm is operating above or below its operating breakeven point.

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