In creating pro forma statements, if we assume that costs, assets, and short-term debt vary directly with changes in sales, that the payout ratio is fixed, and that the change in long-term debt only results from payments made as required on the debt contracts, then the "plug" required for the balance sheet to balance will probably be:

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In this scenario, the "plug" figure, or the variable that adjusts to ensure the balance sheet balances, is likely to be new equity sales. This is because costs, assets, and short-term debt are assumed to vary directly with sales, the payout ratio is fixed, and changes in long-term debt are only due to contractual payments, leaving new equity sales as the variable that can be adjusted to balance the sheet.

In Creating Pro Forma Statements, If We Assume That Costs