1. When preparing pro forma financial statement, the income statement must be prepared first because the projected retained earnings balance on the balance sheet is based on the expected net income. True False

2. In the percent of sales method, a company's asset requirements are based on the company's projected sales level. True False

3. Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.81 times at the end of 2008. If the firm's total debt at year-end was $9.00 million, how much equity does Trina's Trikes have? $

$1.81 million

$16.29 million

$9.00 million

$4.97 million