Connecting Balance Sheet Plugs : A New Integrated Presentation of Pro Forma Analysis

Using a “plug” figure or “slack term” within a pro forma analysis is the standard method to make a forecasted balance sheet have assets equal liabilities and equity. The plug is usually stock or long-term debt because either one or a combination of the two, are assumed to be the source of funding for sales growth. In this presentation, a mathematical connection between the two different plug figures is demonstrated allowing for a more integrated presentation of pro forma analysis rather than the perception of each type of plug belonging to a separate independent technique