When Constructing Pro Forma Financial Statements, Which of the Following

question 68

Multiple Choice

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

• A)Forecast next period's balance sheet.
• B)Determine the additional funds needed, AFN, to support expected growth.
• C)Forecast next period's income statement.
• 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.

---

Definitions:

Human Papilloma Virus

A group of viruses that can cause warts on the skin or mucous membranes and may lead to cancers such as cervical cancer.

Genital Warts

A sexually transmitted infection characterized by small, fleshy growths on the genital or anal area, caused by human papillomavirus (HPV).

Oral Contraceptives

Medications taken by mouth to prevent pregnancy, typically containing synthetic forms of hormones estrogen and/or progesterone.

Monogamous Relationship

A relationship in which an individual has only one partner during their lifetime or at any one time.