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Why Is It Important to Compute Pro Forma Common Size

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Short Answer

Why is it important to compute pro forma common size balance sheets and income statements when evaluating a commercial loan?


Definitions:

Consumers

Individuals or entities that purchase goods or services for personal use rather than for manufacturing or resale.

Substitute

A good or service that can be used in place of another, offering consumers a choice when making purchase decisions.

Input

Resources used in the production process of goods or services, including labor, materials, and capital.

Removing Subsidy

The process of eliminating financial support provided by governments to businesses, individuals, or other government departments.

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