Which of the following statements is true of financial forecasts in the financial planning process?
A. The forecast of money the firm needs is estimated by adding the increases in assets and spontaneous liabilities and subtracting the operating income.
B. The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet.
C. The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations.
D. The projected balance sheet method of forecasting financial needs does not consider dividends paid out to shareholders as these are after tax payments from retained earnings.
E. The financial forecasts of a firm do not consider the forecasts of the economic prospects for the nation and the industry.
Answer: C
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