1. What are the basic benefits and purposes of developing pro forma statements and a cash budget? What are the pitfalls in the process? How do you think you could avoid these pitfalls?
2. What effect will disinflation following a highly inflationary period have on the reported income of the firm? Why might disinflation prove to be favorable to financial assets? What's going on today that might create a spectre of worry for the firm regarding inflation or disinflation?