The most common approach to developing pro forma financial statements is called the:
A) cash budget method.
B) financial planning method.
C) seasonality approach.
D) percent-of-sales method.
E) market-oriented approach.

Question

Quizplus · Accepted Answer

The percent-of-sales method is the most common approach to developing pro forma financial statements. It involves estimating future sales and then projecting the various income statement and balance sheet items as percentages of those sales. Any changes in sales can then be used to adjust the projections for the other line items.

The Most Common Approach to Developing Pro Forma Financial Statements