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.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial data across consecutive periods to identify trends and growth patterns.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) or income and expenses is represented as a proportion of a total account.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Horizontal Analysis

Horizontal analysis is a financial analysis technique that compares historical financial data across different periods, to identify trends and growth patterns by analyzing changes in line items.