Question #7
Reading: Reading 14 Financial Statement Modeling
PDF File: Reading 14 Financial Statement Modeling.pdf
Page: 4
Status: Unattempted
Question
For the purpose of forecasting proforma financial statements, which of the following statements is most accurate?
Answer Choices:
A. Forecasted depreciation rates and capital expenditure are usually based on forecasted data
B. Forecasted depreciation rates are usually based on historic information whereas forecasted capital expenditure is usually based on forecasted data
Explanation
Depreciation rates are usually taken from historic disclosures regarding rates used in prior
periods. Capital expenditure is usually forecast using analysts' judgment regarding future
needs for PPE.