In the development of proforma statements, a firm that requires external funds means that the firm's projected level of cash is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the dividend to stockholders.

Question

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A firm that requires external funds means that the firm's projected level of cash is insufficient to meet its needs and it needs to raise funds through external sources like borrowing or equity financing.

In the Development of Proforma Statements, a Firm That Requires