Pro Forma Financial Statements Are Prepared at the End of the Year

question 131

True/False

Pro forma financial statements are prepared at the end of the year and are used to evaluate the performance of managers.

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its total variable costs, indicating how much contribution the product makes towards fixed costs and profits.

Variable Cost

Costs that vary directly with the level of output or production activity, such as raw materials or hourly labor.

Cash Break-even

The point at which a company does not make a profit or loss from operations, calculated by covering all cash operating expenses with the revenue generated.

Net Present Value

A calculation used to determine the value of a project or investment by discounting future cash flows to the present.