Assignment 1: Financial Ratios, Pro Forma Financial Statements, and Life Cycle
Respond to the following questions thoroughly, in 150-300 words for each question. Use your textbook as your first and major reference.
1. What are the basic types of financial ratios and how can they be used during the life cycle of a business? For small business firms, who are the likely users of these ratios and what are their concerns or interests?
2. What are the uses of pro forma financial statements? What methods can be used to construct pro forma statements and what are the pros and cons of each?
3. What is a venture’s life cycle? What are the various stages in the life cycle and what are the important activities in each stage? How can this concept be used in the financial planning and management of a small business?