Development of Pro Forma Financial Statements Helps a Financial Manager

question 52

True/False

Development of pro forma financial statements helps a financial manager to project the amount of external financing required to support a given level of sales as well as overall financial performance of the firm in the coming year.

---

Definitions:

Security Interest

A financial interest in a piece of property, granted to a creditor, ensuring claim to the property should the debtor default on their obligation.

Automatic Perfection

A legal condition in which a security interest in a collateral automatically becomes effective without the need for any further action, under certain conditions, once it attaches.

Principal Debtor

The main individual or entity obligated to repay a debt on which a security may be claimed.

Surety

A person or entity that takes responsibility for another's performance of an obligation, such as the payment of a debt.