Statements for company-spontaneously generated funds

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Reference no: EM131983195

1. In creating pro forma financial statements for a company, spontaneously generated funds:

would be treated as an automatic increase in available funds

would decrease retained earnings available to the company

will increase the capital needed in the coming year

would increase the assets needed to support an increase in sales

have no impact on projected financial statements or financing needs

2. Relying on the capital intensity ratio would allow a company to estimate:

the degree of probable improper accumulation on the books

the impact of financing feedbacks on projected assets

the transaction costs incurred in issuing securities

the amount of assets needed to support expanded sales

the real versus the nominal cost of capital to the firm

Reference no: EM131983195

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