Question: The pro-forma balance sheet can be used to begin to answer the following:
- How increases in assets have been financed
- It can help top management figure out the kinds of financing to increase or decrease based on expectations in the coming period (year, quarter, etc).
- To create strategic or operational goals to help organizations run better and to address agency theory issues in the process
- As a communication tool for any stakeholder of the company (bankers, lenders, stockholders) to help guide the future.
- As a way to predict future financial ratios and the interpretations that come out of them before they actually occur.