Fabulous Pro Forma Statements Are Based On

Pro forma income statements provide an important benchmark or budget for operating a business throughout the year.

Pro forma statements are based on. There are three major pro forma statements. Standard accounting statements like the balance sheet look at historical financial information but pro forma documents look forward to help you predict future income through different types of accounting statements. What Are Pro Forma Financial Statements.

In essence it contains our financial goals for the company. Pro forma income statements Pro forma balance sheets Pro forma cash flow statements. Pro forma financial statements incorporate hypothetical amounts forecasts or estimates built into the data to give a picture of a companys profits if certain nonrecurring items were excluded.

Businesses use pro forma. A pro forma financial statement offers projections of what management expects to happen under a particular set of circumstances and assumptions. A pro forma income statement is simply a future version of an income statement.

Standard financial statements are based on a companys historical performance. Pro forma a Latin term meaning as a matter of form is applied to the process of presenting financial projections for a specific time period in a standardized format. Since an income statement summarizes our financial performance over some period a Pro Forma Income Statement represents how we want our business to perform in the future.

Essentially pro forma financial statements are financial reports based on hypothetical scenarios that utilize assumptions or financial projections. For example they can determine whether expenses can be expected to run higher in the first quarter of the year than in the second. Example of Pro Forma Financial Statement A corporation may want to see the effects of three possible financing options.

They can also determine whether sales can be expected to run above average in lets say June. The full-year projection provides the pro forma for a full year until data which means that whatever is. A business pro forma statement may include projected revenue estimated expenses and cash flow for three to five years.