1. The primary purpose in preparing pro forma financial statements is: a. for cash planning. b. to ensure the ability to pay dividends. c. for risk analysis. d. for profit planning. 2. The method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sales. a. percent of sales b. accrual c. judgmental d. cash 3. The key input to any cash budget is a. the sales forecast. b. the production plan. c. the pro forma balance sheet