In the development of pro forma statements, a firm that requires external funds means that its projected level of cash is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the dividend to stockholders.

Question

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A firm that requires external funds means that its projected level of cash is not enough to cover its needs, and therefore additional funds would need to be raised through external financing such as issuing debt or equity. This would result in a decrease in available funds for repaying debt, repurchasing stock or increasing dividends.

In the Development of Pro Forma Statements, a Firm That