Projected financial statements can be used to assess the sensitivity of all of the following except:
A) a firm's liquidity.
B) a firm's leverage to changes in assumptions.
C) conditions under which the firm's debt covenants may become binding.
D) unusual patterns for projected total assets.

Question

Quizplus · Accepted Answer

Projected financial statements can be used to assess a firm's liquidity, leverage, and debt covenant compliance, but they are not effective in determining unusual patterns for projected total assets. Other tools or methods may be more appropriate for detecting unusual patterns in projected total assets.

Projected Financial Statements Can Be Used to Assess the Sensitivity