Which of the following statements would NOT be a valid use of pro forma financial statements?...
Which of the following statements would NOT be a valid use of pro forma financial statements?
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A. to determine a firm's needs for financing
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B. to enhance a firm's ability to offer shareholders guaranteed operating results
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C. to analyze the effects of a firm's forecasts on its financial performance
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D. to serve as a benchmark when comparing actual results to planned activities
Homework Answers
B. to enhance a firm's ability to offer shareholders guaranteed operating results
Pro forma financial statements is an estimated financial statements for future period based on past results and certain assumptions/adjustments. Pro forma financial statements may issued to public for potential investors or prepared internally for management decision makings. Pro forma financial statements does not guarantee future earnings but it shows expected earning potential of firm in future.
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