![]() Make decisions about marketing, production, research, development, and projects. Identify the company assumptions about their financial and operating characteristics. Translate data into cash flow projections. ![]() You can also use pro forma statements to do the following:ĭevelop various sales and budget projections.Īssemble results in profit/loss projections. Leases: How big leases, such as buildings or vehicles, will affect the budget with new accounting standards. In startups, this is often a way to find venture capital. One-Time Large Purchases: Purchases such as land or services, and how they affect the budget.Ĭompany Mergers or Acquisitions: Complete as a part of due diligence to assess future business operating prospects and valuation. Instead of tracking the past exactly, such as would be reported in historical income statements, pro forma statements are used to guide big financial decisions, such as the following:ĭebt Refinancing: How the short term is affected by refinance options. ![]() Anything the company sees as a one-time only expense - or that does not show the company’s representative value - is removed. Pro forma data estimates are built in to show the company’s profits if certain, one-time items are taken out. “Pro forma” literally means “as a matter of form.” In finance, this matter of form forecasts the future based on the present, using hypothetical budgeting. Often used to back up a lending or investment proposal, they are issued in a standardized format that includes balance sheets, income statements, and statements of cash flow. Pro forma financial statements present the complete future economic projection of a company or person. ![]()
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