Which of the following statements is correct?

One of the key steps when developing pro forma financial statements is to determine the breakdown of common equity between common stock and retained earnings.

The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales.

The value of equity obtained from dividend discount model is usually the same as that obtained from discount cash flow model.

Pro forma financial statements as discussed in the text are used primarily as a part of the managerial compensation program where managements historical performance is evaluated.