Why Would a Firm Prepare Pro Forma Financial Statements

Multiple Choice

Why would a firm prepare pro forma financial statements?

A) to ascertain whether operations will generate sufficient cash flows to finance expenditures on long-term assets or whether the firm will need to borrow more
B) to analyze the effect of a change its product lines or pricing policies and the impact on rates of return.
C) to project future financial statement amounts for an acquisition target to ascertain the price it should pay
D) all of the above
E) none of the above