The first, and most critical, step in constructing a set of pro forma financial statements is the sales forecast.

Question

Quizplus · Accepted Answer

The sales forecast is the foundation upon which all other assumptions and projections in the pro forma financial statements are based. Without an accurate sales forecast, it is impossible to make reliable estimates of expenses, profits, and cash flow. Therefore, it is the most critical step in constructing pro forma financial statements.

The First, and Most Critical, Step in Constructing a Set