Chapter 8 Flashcards
(9 cards)
An explanation of the most critical assumptions on which entrepreneurs base their firm’s financial statements.
Assumptions sheet
The point where total revenue equals the total costs associated with the output.
Break-even point
A firm’s ability to meet its short-term financial obligations.
Liquidity
Total sales minus allowances for returned goods and discounts.
net sales
Provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.
Pro forma balance sheet
Projections for future-period forecasts; typically, firms complete them for two to three years in the future.
Pro forma finanical statements
A financial statement showing the projected results of a firm’s operations over a specific period.
pro forma income statement
A financial statement showing the projected flow of cash into and out of a company for a specific period.
pro forma statement of cash flow
A firm’s current assets minus its current liabilities.
working capital
