If the Pro Forma Balance Sheet Shows That Total Assets

question 95

Multiple Choice

If the pro forma balance sheet shows that total assets must increase by $400,000 while retaining a debt-equity ratio of 0.75 then:

• A) debt must increase by $300,000.
• B) equity must increase by the full $400,000.
• C) debt must increase by $171,429.
• D) equity must increase by $100,000.

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Definitions:

Strategic Planning

Strategic planning involves determining the course an organization will take and deciding how to allocate resources, such as money and personnel, to follow that path.

Forecasting

the process of making predictions about future events based on historical and current data.

Retirement Account

A financial arrangement designed to replace employment income upon retirement, often offering tax benefits.

Trend Analysis

The practice of collecting information and attempting to spot a pattern, often used in financial markets, research, and responsive business strategy planning.