True or False Forecasting Financial Statements 1. When creating pro forma financial statements, always start with the balance sheet. 2. Forecasting Financial Statements are important for planning for the future. 3. Several methods exist for forecasting sales: top-down method using macroeconomic variables, bottom-up method builds demand for each product, time series method using regression analysis to extrapolate historic trends. 4. To establish if the income statement item varies with sales, one way is to create a chart comparing the item with sales over time. 5. The firm's cash balance is the easiest item to forecast