The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how ________ and ________ will grow with sales.
A)debt, equity
B)dividends, equity
C)coupons, debt
D)dividends, preference shares

Question

Quizplus · Accepted Answer

The growth of debt and equity with sales determines the financing mix of the company and affects the balance between assets and liabilities on the balance sheet. If these assumptions are not made, the balance sheet will not balance. Therefore, option A is the correct choice.

The Asset and Liability Side of a Pro Forma Balance