Which is a potential limitation of using projected financial statements?

Projected financial statements serve as estimates of future financial performance, and one significant limitation is their heavy reliance on assumptions. These assumptions can involve various factors such as market conditions, economic trends, customer demand, and operational performance, among others. Because these projections are based on expected future scenarios rather than guaranteed outcomes, any inaccuracies in the assumptions can lead to significant differences between projected and actual results. This uncertainty makes it challenging for stakeholders to make confident decisions based solely on these projections.

The other options do not accurately capture limitations associated with projected financial statements. They do not always predict actual results since they are forecasts and inherently uncertain. Additionally, projected financial statements can be created independently of actual financial results, as they are meant to provide forward-looking insights based on estimates rather than historical data. While historical data can be useful for crafting projections, it is not strictly required to create them.