Which of the following statements is correct if a firm’s pro forma financial statements project net income of $12,000 and external financing required of $5,000? Total assets cannot grow by more than $10,000. Dividends cannot exceed $10,000. Retained earnings cannot grow by more than $12,000. Long-term debt cannot grow by more than $5,000.

Retained earnings cannot grow by more than $12,000.

Explanation:

The most correct statement is that if a firm’s pro forma financial statements project net income of $12,000 and external financing required of $5,000, Retained earnings cannot grow by more than $12,000.

The rationale is that growth in retained earnings can only happen through net income, since opening retained earnings + net income = closing retained earnings.

What could also have been true is that: Long-term debt cannot grow by more than $5,000 but the scenario did not mention if the external financing would be short term or long term.

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the metropolitan museum of art. source: anton_ivanov / shutterstock.

central park. source: gagliardiphotography / shutterstock.

national 9/11 memorial and museum.

empire state building.

statue of liberty.

the museum of modern art (moma)

rockefeller center.

brooklyn bridge.

explanation: