Question: Suppose a friend of yours showed you the pro forma
Suppose a friend of yours showed you the pro forma income statements for his start-up and exclaimed excitedly that during the first three years of operations his firm will make a net income of $150,000 per year, which is just the amount of money ($450,000) the firm will need to pay off a three-year loan. Given your study of the chapter, why is it that your friend may not actually have $450,000 in cash, even though his pro forma income statements say that he will earn that amount of money?
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