The Method in Which Pro Forma Statements Are Constructed by Assuring

question 13

Multiple Choice

The method in which pro forma statements are constructed by assuring that all items grow in proportion to sales is called the

• A) percentage of sales method
• B) common size method
• C) sales dilution method
• D) sales receipt method

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Definitions:

Salvage Value

The foreseen market valuation of an asset at the lifespan’s end.

Present Values

The now-value of a forthcoming financial amount or cash flow pattern, discounted at a fixed rate of return.

Net Present Value Method

A financial analysis tool used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Annual Return

The percentage of increase or decrease in an investment's value over a one-year period.