The preparation of pro forma financial statements accomplishes which of the following objectives?
A)It allows management to pinpoint a firm's optimal share price.
B)It is essential if the firm is to accurately estimate its weighted average cost of capital.
C)It assists management in making decisions with respect to raising the capital that is needed for growth.
D)It pinpoints periods when the firm will have short-term cash surpluses.

Question

Quizplus · Accepted Answer

The preparation of pro forma financial statements assists management in making decisions with respect to raising the capital that is needed for growth. It allows management to assess the financial impact of potential investment decisions and to determine the amount and type of financing that will be required to support those decisions. The other options are not accurate objectives of pro forma financial statements.

The Preparation of Pro Forma Financial Statements Accomplishes Which of the Following