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What Is Pro Forma?

  • Types of Financial Statements
  • Pro Forma FAQs
  • Corporate Finance

Pro Forma: What It Means and How to Create Pro Forma Financial Statements

pro forma in business plan

Pro forma means “for the sake of form” or “as a matter of form." When it appears in financial statements, it indicates that a method of calculating financial results using certain projections or presumptions has been used.

Pro forma financials are not computed using generally accepted accounting principles  (GAAP) and usually leave out one-time expenses that are not part of normal company operations, such as restructuring costs following a  merger .

Essentially, a pro forma financial statement can exclude anything a company believes obscures the accuracy of its financial outlook and can be a useful piece of information to help assess a company's future prospects.

Key Takeaways

  • Pro forma, Latin for “as a matter of form” or “for the sake of form”, is a method of calculating financial results using certain projections or presumptions.
  • Pro forma financials may not be GAAP compliant but can be issued to the public to highlight certain items for potential investors.
  • They can also be used internally by management for aiding in business decisions.
  • It's illegal for publicly traded companies to mislead investors with pro forma financial results that do not use the most conservative possible estimates of revenue and expense.

Investopedia / Matthew Collins

What Are the Types of Pro Forma Financial Statements?

Pro forma financial statements are projections of future expenses and revenues, based on a company's past experience and future plans.

Some standard pro format statements include the following:

Pro Forma Budget Documents

A budget anticipates the inflow of projected revenues and the outflow of funds for a defined future period, usually a  fiscal year .

A budget is based on certain assumptions about future expenses and revenues. It takes into account past expenses and revenues and factors in the costs of the company's plans for the fiscal year.

Pro Forma Company Income Statements

A pro forma income statement uses the pro forma calculation method, mainly to draw the attention of potential investors to specific numbers when a company issues its quarterly earnings announcement .

For example, a company will report its actual sales and expenses for the quarter that just passed and, in the same chart, will list its projections of these numbers for the current quarter.

In this case, the company is projecting the future, based on its knowledge of past sales and expenses and factoring in expected changes.

Pro Forma Earnings Projections

A company may present a pro forma statement to inform investors about their internal assessment of the financial outcome of a proposed change in the business.

For example, if a company is considering an acquisition or a merger, it may publish a pro format statement of the expected impact of the move on its future earnings and expenses.

Pro Forma Financial Accounting

In  financial accounting , a pro forma earnings report excludes unusual or nonrecurring transactions.

These excluded expenses could include declining investment values, restructuring costs, and adjustments made on the company’s balance sheet that fix accounting errors from prior years.

Pro Forma Managerial Accounting

Accountants prepare financial statements in the pro forma method ahead of a proposed transaction such as an acquisition, merger, a change in a company's capital structure , or new capital investment.

These are models that forecast the expected result of the proposed transaction. They focus on estimated net revenues, cash flows, and taxes.

The statements are presented to the company's management to help it make a decision on a proposed action based on its potential benefits and costs.

Limitations of Pro Forma Statements

Investors should be aware that a company’s pro forma financial statements can hold figures or calculations that do not comply with generally accepted accounting principles (GAAP), the set of standards followed by public companies for their financial statements.

In fact, they can differ vastly. Pro forma results may contain adjustments to GAAP numbers in order to highlight important aspects of the company's operating performance.

Pro forma financials in the United States boomed in the late 1990s when dot-com companies used the method to make losses appear like profits or, at a minimum, to reveal much greater gains than indicated through U.S. GAAP accounting methods.

The U.S. Securities and Exchange Commission  (SEC) responded by  cautioning that publicly traded companies  report and make public U.S. GAAP-based financial results as well. The SEC also clarified that it would deem using pro forma results to grossly misconstrue GAAP-based results and mislead investors fraudulent and punishable by law.

Using pro forma results to grossly misconstrue GAAP-based results and mislead investors is deemed by the U.S. Securities and Exchange Commission (SEC) to be fraudulent and punishable by law.

How to Create a Pro Forma Statement

Basic templates for creating pro forma statements can be found online, or they can be created using a Microsoft Excel spreadsheet to automatically populate and calculate the correct entries based on your inputs.

You can also create a pro format financial statement by hand. The steps are:

  • Calculate the estimated revenue projections for your business. This process is called pro forma forecasting. Use realistic market assumptions. Do your research and speak with experts and accountants to determine what a normal annual revenue stream is, as well as asset accumulation assumptions. Your estimates should be on the conservative side.
  • Estimate your total liabilities and costs. Liabilities include loans and  lines of credit . Costs include lease payments, utilities, employee pay, insurance, licenses, permits, materials, and taxes. Keep your estimates realistic.
  • Use the revenue projections from Step 1 and the total costs found in Step 2 to create the first part of your pro format, This part will project your future  net income  (NI).
  • Estimate cash flows . This part of the pro forma statement will identify the net effect on cash if the proposed business change is implemented. Cash flow differs from NI because, under  accrual accounting , certain revenues and expenses are recognized prior to or after cash changes hands.

Here’s a historical example of a pro forma income statement, courtesy of Tesla Inc.'s (TSLA) unaudited pro forma condensed and consolidated income statement for the year ended Dec. 31, 2016.

What Is a Pro Forma Financial Statement?

Pro forma financial statements incorporate hypothetical numbers or estimates. They are built into the data to give a picture of a company's profits if certain nonrecurring items are excluded.

These are often intended to be preliminary or illustrative financials that do not follow standard accounting practices. Companies use their own discretion in calculating pro forma earnings, including or excluding items depending on what they feel reflects the company's true performance or future performance.

As pro forma forecasts are hypothetical in nature, they can deviate from actual results, sometimes significantly.

What's the Difference Between Pro Forma and GAAP Financials?

There are no universal rules that companies must follow when reporting pro forma earnings. This is why it is important for investors to distinguish between pro forma earnings and those reported using generally accepted accounting principles (GAAP).

GAAP enforces strict guidelines when companies report earnings, while pro forma figures are better thought of as hypothetical earnings.

For this reason, investors must examine not only the pro forma earnings, but also GAAP earnings, and never mistake one for the other.

What Is a Pro Forma Invoice?

A pro forma invoice is a preliminary  bill of sale  sent to a buyer in advance of a shipment or delivery of goods. The invoice will typically describe the purchased items and other important information, such as the shipping weight and transport charges.

A pro forma invoice requires only enough information to allow customs officials to determine the duties needed from a general examination of the included goods.

Can You Compare Pro Forma Statements From Different Companies?

Maybe, but it is not advised. Companies' definitions of pro forma vary along with their internal methods for forecasting and making assumptions.

If you don't know how each of the companies defines its pro forma figures, you may be comparing apples to oranges. 

U.S. Securities and Exchange Commission. " ACTION: Cautionary Advice Regarding the Use of "Pro Forma" Financial Information in Earnings Releases ."

U.S. Securities and Exchange Commission. " Tesla, Inc. Form 10-K ."

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Pro Forma Business Plan Template & Financial Statements

Written by Dave Lavinsky

Pro Forma Financial Statement Template

What are Pro Forma Financial statements?

A pro forma business plan is simply another name for a business plan. The term “pro forma” specifically means “based on financial assumptions or projections” which all business plans are. That is, all business plans present a vision of the company’s future using assumptions and projections. “Pro forma” most specifically refers to the financial projections included in your plan, as these are entirely based on future assumptions.

Pro forma financial statements are a type of statement that provides estimates or financial projections for a company. They are often used by businesses to plan for upcoming periods or quarters, assess new opportunities, or track progress against goals.

Why include a Pro Forma Statement in your Business Plan

A pro forma statement is important for your business plan because it gives investors and lenders an idea of your company’s potential financial health. They use your pro forma statements in determining whether to invest in your company or not. Among other things, they consider the likelihood your company will achieve the financial results you forecast, and their expected return on investment (ROI). Your pro forma financial statements also help you to identify and track key financial indicators and metrics over time.

Writing a Pro Forma Business Plan

When writing a pro forma business plan, you will need to include information such as your company’s sales forecasts, expenses, capital expenditure plans, and funding requirements. You should also include a pro forma income statement, balance sheet, and cash flow statement.

Importance of a Pro Forma Income Statement in Business Plans

The pro forma income statement is a crucial financial tool that can be used to assess the viability of your business. It shows a company’s expected revenue and expenses over a period of time and can help you to identify potential problems early on.

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Types of pro forma statements in business plans.

There are several types of pro forma statements, including the income statement, balance sheet, and cash flow statement.

Pro Forma Income Statement

A pro forma income statement is an estimate of your company’s financial performance over a period of time. It shows your expected revenue and expenses and can be used to assess the viability of your business.

Example 5 Year Annual Income Statement

Pro Forma Balance Sheet

A pro forma balance sheet is an estimate of your company’s financial position at a specific point in time. It shows your assets, liabilities, and equity, and can be used to assess your company’s financial health.

Example 5 Year Annual Balance Sheet

Pro Forma Cash Flow Statement

A pro forma cash flow statement is an estimate of how your company’s cash flows over a period of time. It shows your expected cash inflows and outflows and can be used to assess your company’s financial health and ensure you never run out of money.

Example 5 Year Annual Cash Flow Statement

Pro Forma Income Statements for a Business Plan

Pro forma statements for a business plan can take many different forms, but they all typically include information on sales forecasts, expenses, capital expenditure plans, and funding requirements. A pro forma statement that is included in a business plan template should also include financial projections and break-even analysis. 

Cash Flow Statements and Pro Forma Income Statements

The main difference between a cash flow statement and a pro forma income statement is that a cash flow statement shows your actual cash inflows and outflows, while a pro forma income statement shows your estimated future financial performance. For example, if you make a sale today, it will be considered revenue in your income statement. But, if you don’t receive payment for that sale for 90 days, that would be reflected in your cash flow statement. A cash flow statement can help you to manage your finances effectively, while a pro forma income statement can help you to assess the viability of your business.

Pro Forma Statements and Budgets

Pro forma statements and budgets are both financial tools that can be used to track the progress of a business. However, there are key differences between them.

A budget is a plan for how you will use your resources to achieve specific goals. It shows your expected income and expenses and can help you to stay on track financially.

A pro forma statement estimates your company’s future financial performance. It shows your expected revenue and expenses and can be used to assess the viability of your business.

Both pro forma statements and budgets can be useful tools for businesses. However, budgets are more focused on short-term planning , while pro forma statements are more concerned with long-term financial planning.

Business Plan Pro Forma Template and Example

The following is an example of a pro forma business plan:

Executive Summary

In this pro forma business plan, we forecasted our company’s sales, expenses, and capital expenditures over the next three years. We also estimated our funding requirements and outlined our plans for growth. Our pro forma income statement shows that we are expected to have positive net income each year of the forecast period. Our pro forma balance sheet shows that we will have a strong financial position, with increasing equity and minimal debt. Lastly, our pro forma statement predicts healthy cash flow throughout the three-year period. We believe that these results demonstrate the viability of our business and its potential for long-term success.

Our company is XYZ, a leading provider of ABC products and services. We have been in business for 10 years, and our products are sold in over 10 countries. We have a strong track record of financial success, and we are now looking to expand our operations into new markets. In order to do this, we need to raise $5 million in funding.

Business Plan Pro Forma

In this section of the business plan, we will provide pro forma statements for our company’s sales, expenses, capital expenditures, funding requirements, and cash flow. These statements will demonstrate the viability of our business and its potential for long-term success.

Sales Forecast

We forecast that our sales will increase by 20% in each year of the forecast period. This growth will be driven by our expansion into new markets, as well as our continued focus on innovation and customer service.

Expense Forecast

We expect our expenses to increase at a slower rate than our sales, due to our economies of scale. We anticipate that our expenses will increase by 15% in Year 1, 10% in Year 2, and 5% in Year 3.

Capital Expenditure Forecast

We forecast that our capital expenditures will increase in line with our sales, at a rate of 20% per year. We plan to invest heavily in research and development, as well as new product launches.

Funding Requirements

We estimate that we will need to raise $5 million in funding in order to expand our operations into new markets. We plan to use this funding to invest in research and development, as well as to cover the costs of marketing and new product launches.

Cash Flow Forecast

Our pro forma cash flow statement predicts healthy cash flow throughout the three-year period. We expect to have positive cash flow in each year of the forecast period.

This pro forma business plan demonstrates the viability of our company and its potential for long-term success. We have a strong track record of financial success, and we are well-positioned to continue growing our business. Our pro forma statements show that we are expected to generate positive net income, and have a strong financial position and healthy cash flow. We believe that this business plan provides a clear roadmap for our company’s future growth.

A pro forma business plan is an important tool for any business owner. By outlining your sales, expenses, and profit, you can get a clear picture of your company’s financial health and make informed decisions about its future. If you’re not sure where to start, we can help. Our team of experts has created a comprehensive business plan template that will guide you through the process of creating your own pro forma business plan. So what are you waiting for? Get started today and ensure your company’s success tomorrow.

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What Are Pro Forma Financial Statements?

Business professional examining pro forma financial statements

  • 28 Oct 2021

When it comes to making business decisions, so much relies on numbers. To get sign-off from key stakeholders, win investors, and strategically plan, you need to demonstrate that your ideas make financial sense.

While certain financial statements —such as balance sheets, income statements, cash flow statements, and annual reports—help provide a historical snapshot of a business’s performance, they often lack the ability to provide foresight when planning for the future. For this reason, professionals typically turn to forecasts and financial projections to guide their plans and answer critical “what if” questions. Pro forma financial statements are a common type of forecast that can be useful in these situations.

Here’s a closer look at what pro forma financial statements are, how they’re created, and why they’re a key aspect of financial decision-making.

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What Is a Pro Forma Financial Statement?

A pro forma financial statement leverages hypothetical data or assumptions about future values to project performance over a period that hasn’t yet occurred.

In the online course Financial Accounting , pro forma financial statements are defined as “financial statements forecasted for future periods. They may also be referred to as a financial forecast or financial projection.”

The course notes that these projections can be used “as a depiction of what the financial statements for the business will look like over a certain period of time, if the assumptions made when preparing them hold true.”

Since the term “pro forma” refers to projections or forecasts, it can apply to a variety of financial statements, including:

  • Income statements
  • Balance sheets
  • Cash flow statements

Whether you’re trying to interpret pro forma financial statements or prepare them, these projections can be useful in guiding important business decisions. In fact, business owners, investors, creditors, and other key decision-makers all use pro forma financial statements to measure the potential impact of business decisions.

How Are Pro Forma Financial Statements Used?

Traditionally, financial statement analysis is used to better understand a company’s performance over a specified period. While this provides insight into a company’s historical health, creating pro forma financial statements focuses on its future. For this reason, these reports can be leveraged in several ways, including analyzing risk, projecting investments, and showing expected results before the end of a reporting period.

One of the most important uses of pro forma reports is related to decision-making and strategic planning efforts. For example, you might create pro forma financial statements to reflect the outcomes of three investment scenarios for your business. Doing so can allow you to conduct a side-by-side comparison of possible outcomes to determine which is favorable and guide your planning process.

Financial Accounting| Understand the numbers that drive business success | Learn More

Creating Pro Forma Financial Statements

Keep in mind that the general process of creating pro forma financial statements isn’t significantly different from that of creating traditional statements. The difference lies in the assumptions and adjustments made about various inputs, while the format and calculations remain the same.

There are, however, specific methods used for these forecasts. The percent of a sales forecasting method, for example, involves determining future expected sales and finding trends across accounts in statements. This is typically used when creating pro formas internally.

Other individual line items can also be easily forecasted, such as the cost of goods sold, since it can be assumed it will proportionally grow with sales. Line items like income tax expense, on the other hand, typically don’t change directly with sales. Stable businesses can generally estimate income tax expense as a percentage of income before taxes.

All in all, the process of preparing a pro forma balance sheet is much the same as preparing a normal balance sheet . The same holds true for the process of preparing income statements and cash flow statements. It differs when you begin forecasting various line items and calculating how those projections impact your bottom line.

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Beyond the Numbers

The true value of pro forma statements goes beyond the numbers they show. These reports provide key stakeholders, investors, and creditors the foresight needed to make decisions and strategically plan. Managers and individual contributors can also benefit from creating pro forma statements, enabling them to understand different factors impacting business units.

Remember: There are limitations to pro forma financial statements. Since these documents are based on assumptions, they shouldn’t be taken as fact. Rather, they can inform decisions using hypothetical data based on historical trends.

Taking an online course like Financial Accounting can help you understand how to create and interpret different kinds of financial statements so you can find meaning in them. Learners enrolled in the course learn the language of accounting and how to create financial statements and forecasts to make strategic decisions.

Do you want to learn more about what's behind the numbers on financial statements? Explore Financial Accounting , one of three courses comprising our Credential of Readiness (CORe) program , to discover how you can develop an intuitive knowledge of financial principles and statements to unlock critical insights into performance and potential.

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About the Author

pro forma in business plan

Pro Forma Financial Statements (with Templates and Examples)

Bryce Warnes

Reviewed by

Janet Berry-Johnson, CPA

April 21, 2022

This article is Tax Professional approved

Pro forma definition

According to Merriam-Webster , “pro forma” means:

  • Made or carried out in a perfunctory manner or as a formality
  • Based on financial assumptions or projections

What's Bench?

I am the text that will be copied.

Pro forma is actually a Latin term meaning “for form” (or today we might say “for the sake of form, as a matter of form”).

When it comes to accounting, pro forma statements are financial reports for your business based on hypothetical scenarios. They’re a way for you to test out situations you think may happen in the future to help you make business decisions.

There are three major pro forma statements:

  • Pro forma income statements
  • Pro forma balance sheets
  • Pro forma cash flow statements

Pro forma statements look like regular statements, except they’re based on what ifs, not real financial results. As in, “What if my business got a $50,000 loan next year?” Your pro forma statements for that scenario would show what your income, account balances, and cash flow would look like with a $50,000 loan.

Since pro forma statements deal with potential outcomes, they’re not considered GAAP compliant . This is because GAAP compliant reports must be based on historical information.

Pro forma statements don’t need to meet the strictest accounting standards , but must be clearly marked as “pro forma” and can’t be used for things like filing taxes. Using pro forma statements that aren’t marked as such to misrepresent your business to investors, the IRS, or financial institutions can be penalized by the Securities and Exchange Commission).

However, pro forma statements are still extremely useful. They can help you make a business plan, create a financial forecast, and even get funding from potential investors or lenders.

Different but related: you can send clients pro forma invoices to let them know how much their order would be if they placed it today.

Why create pro forma statements?

Creating pro forma statements for future scenarios can help you:

  • Get financed, by showing lenders or investors how you would use their money to sustainably grow your business.
  • Plan for the future, by considering best, worst, and most likely case scenarios in detail.
  • Anticipate changes that may affect your business as it grows, such as entering a new tax bracket.

For these purposes, pro forma statements are typically created as a part of a financial forecast in financial accounting. Big corporations who have in-house accountants use pro forma statements for financial modeling and forecasting different scenarios.

Pro forma statements vs. budgets

It may be tempting to think of a pro forma statement as the same as a business budget . After all, you create both in anticipation of the future. And both help you plan how you’ll use your money. But budgets and pro forma statements are two distinct financial tools.

Think of it this way: A pro forma statement is a prediction, and a budget is a plan. Your budget may be based on the financial information of your pro forma statements—after all, it makes sense to make plans based on your predictions.

For example: Your income this year is $37,000. According to your pro forma annual income statement, your financial projections show it will be $44,000 next year. So, when you create next year’s budget, you can include that extra $7,000—maybe spending $4,000 over the course of the year to pay down the principal on a loan , while adding $3,000 to savings.

Types of pro forma statement

There are four main types of pro forma statements. While they all fall into the same categories—income statement, balance sheet, and cash flow statement—they differ based on the purpose of the financial forecast.

1. Full-year pro forma projection

This type of pro forma projection takes into account all of your financials for the fiscal year up until the present time, then adds projected outcomes for the remainder of the year. That can help you show investors or partners what business finances could look like by the end of the fiscal year.

2. Financing or investment pro forma projection

You may be courting investors or trying to convince your business partners of the value of a capital investment or additional financing. In that case, you can use a financing pro forma projection to make your case. It takes into account an injection of cash from an outside source—plus any interest payments you may need to make—and shows how it will affect your business’s financial position.

3. Historical with acquisition pro forma projection

This type of pro forma projection looks at the past financial statements of your business, plus the past financial statements of a business you want to buy . Then it merges them to show what your financials would have looked like if you made a business combination (or merger) earlier. You can use this scenario as a model of what may happen in the future if you buy the other business and restructure now.

4. Risk analysis pro forma projection

Looking at both best case and worst case scenarios helps you make financial decisions based on challenges you may face in the future. For instance, what happens if your main vendor raises their prices like they did last year? Or how will that proposed transaction of buying new equipment impact you long term? Risk analysis lets you take the future for a test ride, and try out different outcomes.

Pro forma templates

To create a pro forma statement, you can use the same template you’d use for a normal financial statement. You may want to use Bench’s free templates:

  • Income statement
  • Balance sheet
  • Cash flow statement

How to create pro forma statements

The sample pro forma statements below may look different from the statements you create, depending on what your template looks like. But generally, these are the steps you need to take to create them—and the info your pro forma statements should include.

Creating a pro forma income statement

There are five steps to creating a pro forma income statement:

  • Set a goal for sales in the period you’re looking at. Let’s say you want to increase your income by $18,000 over the course of one year.
  • Set a production schedule that will let you reach your goal, and map it out over the time period you’re covering. In this case, you’ll want to earn an additional $1,500 income every month, for 12 months.
  • Plan how you’ll match your production schedule. You could do this by growing your number of sales a fixed amount every month, or gradually increasing the amount of sales you make per month. It’s up to you—trust your experience as a business owner.
  • It’s time for the “loss” part of “ Profit and Loss .” Calculate the cost of goods sold for each month in your projection. Then, deduct it from your sales. Deduct any other operating expenses you have, as well.
  • Prepare your pro forma income statement using data you’ve compiled in the prior four steps.

One note: your pro forma statements will be much more accurate if your bookkeeping is up to date. That way, when you project future periods, you’re basing it off the reality of your business today.

How Bench can help

To predict the future, you first need to understand the past. With Bench, you get a crystal clear image of your financial history so you can focus on planning your future. We’re America’s largest bookkeeping service helping thousands of business owners better understand the financial health of their operations so they can keep focused on growth and planning. When it comes time to create a pro forma statement, you have reliable numbers and reports to get started. We may not be a crystal ball, but we’re the next best thing. Learn more .

Example pro forma income statement:

Rosalia’s Reliable Recordings

Creating a pro forma cash flow statement

You create a pro forma cash flow statement much the same way you’d create a normal cash flow statement. That means taking info from the income statement, then using the cash flow statement format to plot out where your money is going, and what you’ll have on hand at any one time. This pro forma statement can be part of a larger cash flow forecast used for decision making.

Your projected cash flow can give you a few different insights. If it’s negative, it means you won’t have enough cash on-hand to run your business, according to your current trajectory. You’ll have to make plans to borrow money and pay it off.

On the other hand, if net cash flow is positive, you can plan on having enough extra cash on hand to pay off loans, or save for a big investment.

Example pro forma cash flow statement

Mickie’s Murakami Museum

Creating a pro forma balance sheet

By drawing on info from the income statement and the cash flow statement, you can create pro forma balance sheets. However, you’ll also need previous balance sheets to make this useful—so you can see how your business got from “Balance A” to “Balance B.”

The balance sheet will project changes in your business accounts over time. So you can plan where to move money, when.

Example pro forma balance sheet

Daily Dumpling Deliveries

Once you’ve created your pro forma income statements, and cast your eyes forward to the future of your business, you can start planning how you’ll spend your money. It’s time to create a small business budget .

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How a Pro Forma Statement Can Help Your Small Business

Rachel Christian

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As a business owner, you know the importance of financial planning and forecasting. 

Pro forma financial statements are powerful tools that can help you project future financial performance, assess potential investments, and evaluate the impact of business decisions.

pro forma in business plan

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What does pro forma mean?

Pro forma is a Latin term that means "as a matter of form" or "for the sake of form." 

In business and accounting, it describes financial statements that are based on assumptions or estimates rather than actual historical data. 

Maybe you’re considering taking out a small business loan or merging with a larger company. A pro forma statement projects the impact of those decisions, showing whether your company’s financial health is expected to improve, decline, or remain the same after the event takes place. 

Pro forma statements can omit certain information. For example, a company may exclude one-time expenses, such as restructuring costs or a legal settlement, in order to present a more accurate picture of ongoing operations.

Pro forma statements, budgets, and invoices are typically used for planning, forecasting, or decision-making purposes.

What are pro forma financial statements?

Pro forma financial statements forecast estimated future financial performance rather than relying solely on historical data. 

Typically, these statements include a pro forma income statement, balance sheet , and cash flow statement , all based on hypothetical scenarios and assumptions.

Pro forma statements are usually preliminary or illustrative. They’re meant to give you a glimpse into a company's potential performance rather than strict adherence to the accounting rulebook.

Companies engaging in mergers and acquisitions often prepare pro forma financial statements to offer a picture of their future finances. These statements play a crucial role in negotiations and valuation discussions.

Sharing a pro forma statement also helps you communicate your growth strategy to lenders and investors. 

Critics of pro forma financial statements argue that companies use this freedom to cherry-pick what to include or exclude, molding the numbers to fit a desired narrative.

Pro forma invoices

Pro forma invoices are preliminary invoices sent to customers before the actual transaction takes place. Think of it as a "pre-invoice.” It outlines the products or services being offered, their quantities, prices, and other essential details

Pro forma invoices are the preferred method of doing international business, according to the U.S. International Trade Administration .

These invoices allow buyers to obtain necessary permits or secure financing before goods are shipped out.

Pro forma invoices also assist with customs clearance by providing necessary information to custom officials for the import and export process. It’s like a financial roadmap to ensure a smooth international trade journey.

While regular invoices are binding and indicate an actual sale, pro forma invoices are a prelude to the real deal. Pro forma invoices don't demand payment or initiate financial transactions.

You can find basic templates for creating pro forma invoices online, or you can create your own with a Microsoft Excel spreadsheet.

Many accounting software programs, such as Sage Accounting and FreshBooks , offer features and templates specifically designed for generating pro forma invoices.

With Sage , for example, you can select a pro forma template, input the information, save a copy for your records, and email it directly to the client. There’s also an option to convert it to a full invoice later.

Different billing and invoicing software also offers this feature. Companies like Zoho Books , for example, offer a pro forma template on their website you can download and use for free.

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Pro forma budgets

A pro forma budget is a projected financial plan that outlines anticipated revenue, expenses, and cash flows for a specific period. 

Pro forma budgets can be useful for assessing the financial feasibility of new projects or projecting the impact of cost-cutting measures.

So, how is it different from a traditional budget?

A regular budget focuses on your current financial situation and sets spending limits based on historical data. It helps you manage day-to-day operations. A pro forma budget, on the other hand, takes things a step further by considering future events or changes.

Let’s say you're planning to launch a new product line. With a pro forma budget, you can estimate the revenue and expenses associated with your new venture. You might consider costs like research and development, manufacturing, marketing, and distribution. 

By projecting the financial outcomes of your product launch, you can assess its viability and make adjustments before it goes live. 

Downsides of pro forma statements

While pro forma statements serve a purpose, they can also be misleading. Excluding certain expenses or items can paint an overly optimistic — or even unrealistic — picture of a company's financial health. 

Businesses have the freedom to use their own discretion when calculating pro forma earnings. They can include or exclude certain items based on what they believe truly represents their company's performance or future prospects.

Just remember, like any financial information, it's important to read between the lines and dig into the assumptions behind impressive pro forma numbers. 

The U.S. Securities and Exchange Commission (SEC) requires companies to provide clear explanations on pro forma statements and reconcile pro forma figures to Generally Accepted Accounting Principles (GAAP). 

Using pro forma projections to grossly misrepresent GAAP-based results and mislead investors is considered fraudulent and punishable by law under SEC regulations. 

Rachel Christian is a Certified Educator in Personal Finance and a senior writer at The Penny Hoarder. She focuses on small businesses, retirement, investing and taxes. 

Pro forma frequently asked questions (FAQs)

Businesses use pro forma statements to examine the potential impact of future events based on certain assumptions. 

Pro forma statements allow companies to make informed decisions based on projections, attract investors, and assess the impact of mergers and acquisitions. 

By adjusting for these events, businesses can gauge potential financial impact and make smarter strategic choices.

Pro forma statements are not bound by the same rigorous standards as audited financial statements. As a result, their accuracy heavily depends on the integrity of the company preparing them.

Pro forma statements rely on forward-looking information, which can be incredibly difficult to predict. Economic conditions, market dynamics and other external factors outside a company’s control can throw even the most well-researched pro forma statements off course. 

That’s why you shouldn’t rely solely on pro forma financial statements.

Regular financial statements are prepared in accordance with Generally Accepted Accounting Principles and provide an accurate depiction of a company's historical financial performance. 

Pro forma statements, on the other hand, are more like "what if" scenarios. They’re created to show how a company's financials might look under different situations or to exclude certain non-recurring costs.

pro forma in business plan

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  • 18.3 Pro Forma Financials
  • Why It Matters
  • 1.1 What Is Finance?
  • 1.2 The Role of Finance in an Organization
  • 1.3 Importance of Data and Technology
  • 1.4 Careers in Finance
  • 1.5 Markets and Participants
  • 1.6 Microeconomic and Macroeconomic Matters
  • 1.7 Financial Instruments
  • 1.8 Concepts of Time and Value
  • Multiple Choice
  • Review Questions
  • Video Activity
  • 2.1 Business Structures
  • 2.2 Relationship between Shareholders and Company Management
  • 2.3 Role of the Board of Directors
  • 2.4 Agency Issues: Shareholders and Corporate Boards
  • 2.5 Interacting with Investors, Intermediaries, and Other Market Participants
  • 2.6 Companies in Domestic and Global Markets
  • CFA Institute
  • 3.1 Microeconomics
  • 3.2 Macroeconomics
  • 3.3 Business Cycles and Economic Activity
  • 3.4 Interest Rates
  • 3.5 Foreign Exchange Rates
  • 3.6 Sources and Characteristics of Economic Data
  • 4.1 Cash versus Accrual Accounting
  • 4.2 Economic Basis for Accrual Accounting
  • 4.3 How Does a Company Recognize a Sale and an Expense?
  • 4.4 When Should a Company Capitalize or Expense an Item?
  • 4.5 What Is “Profit” versus “Loss” for the Company?
  • 5.1 The Income Statement
  • 5.2 The Balance Sheet
  • 5.3 The Relationship between the Balance Sheet and the Income Statement
  • 5.4 The Statement of Owner’s Equity
  • 5.5 The Statement of Cash Flows
  • 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF)
  • 5.7 Common-Size Statements
  • 5.8 Reporting Financial Activity
  • 6.1 Ratios: Condensing Information into Smaller Pieces
  • 6.2 Operating Efficiency Ratios
  • 6.3 Liquidity Ratios
  • 6.4 Solvency Ratios
  • 6.5 Market Value Ratios
  • 6.6 Profitability Ratios and the DuPont Method
  • 7.1 Now versus Later Concepts
  • 7.2 Time Value of Money (TVM) Basics
  • 7.3 Methods for Solving Time Value of Money Problems
  • 7.4 Applications of TVM in Finance
  • 8.1 Perpetuities
  • 8.2 Annuities
  • 8.3 Loan Amortization
  • 8.4 Stated versus Effective Rates
  • 8.5 Equal Payments with a Financial Calculator and Excel
  • 9.1 Timing of Cash Flows
  • 9.2 Unequal Payments Using a Financial Calculator or Microsoft Excel
  • 10.1 Characteristics of Bonds
  • 10.2 Bond Valuation
  • 10.3 Using the Yield Curve
  • 10.4 Risks of Interest Rates and Default
  • 10.5 Using Spreadsheets to Solve Bond Problems
  • 11.1 Multiple Approaches to Stock Valuation
  • 11.2 Dividend Discount Models (DDMs)
  • 11.3 Discounted Cash Flow (DCF) Model
  • 11.4 Preferred Stock
  • 11.5 Efficient Markets
  • 12.1 Overview of US Financial Markets
  • 12.2 Historical Picture of Inflation
  • 12.3 Historical Picture of Returns to Bonds
  • 12.4 Historical Picture of Returns to Stocks
  • 13.1 Measures of Center
  • 13.2 Measures of Spread
  • 13.3 Measures of Position
  • 13.4 Statistical Distributions
  • 13.5 Probability Distributions
  • 13.6 Data Visualization and Graphical Displays
  • 13.7 The R Statistical Analysis Tool
  • 14.1 Correlation Analysis
  • 14.2 Linear Regression Analysis
  • 14.3 Best-Fit Linear Model
  • 14.4 Regression Applications in Finance
  • 14.5 Predictions and Prediction Intervals
  • 14.6 Use of R Statistical Analysis Tool for Regression Analysis
  • 15.1 Risk and Return to an Individual Asset
  • 15.2 Risk and Return to Multiple Assets
  • 15.3 The Capital Asset Pricing Model (CAPM)
  • 15.4 Applications in Performance Measurement
  • 15.5 Using Excel to Make Investment Decisions
  • 16.1 Payback Period Method
  • 16.2 Net Present Value (NPV) Method
  • 16.3 Internal Rate of Return (IRR) Method
  • 16.4 Alternative Methods
  • 16.5 Choosing between Projects
  • 16.6 Using Excel to Make Company Investment Decisions
  • 17.1 The Concept of Capital Structure
  • 17.2 The Costs of Debt and Equity Capital
  • 17.3 Calculating the Weighted Average Cost of Capital
  • 17.4 Capital Structure Choices
  • 17.5 Optimal Capital Structure
  • 17.6 Alternative Sources of Funds
  • 18.1 The Importance of Forecasting
  • 18.2 Forecasting Sales
  • 18.4 Generating the Complete Forecast
  • 18.5 Forecasting Cash Flow and Assessing the Value of Growth
  • 18.6 Using Excel to Create the Long-Term Forecast
  • 19.1 What Is Working Capital?
  • 19.2 What Is Trade Credit?
  • 19.3 Cash Management
  • 19.4 Receivables Management
  • 19.5 Inventory Management
  • 19.6 Using Excel to Create the Short-Term Plan
  • 20.1 The Importance of Risk Management
  • 20.2 Commodity Price Risk
  • 20.3 Exchange Rates and Risk
  • 20.4 Interest Rate Risk

Learning Outcomes

By the end of this section, you will be able to:

  • Define pro forma in the context of a financial forecast.
  • Describe the factors that impact the length of a financial forecast.
  • Explain the risks associated with a financial forecast.

In this section of the chapter, we will move beyond the sales forecast and look at the general nature, length, and timeline of forecasts and the risks associated with using them. We’ll look at why we use them, how long they generally are, what the key variables in a forecast are, and how we pair those variables with common-size analysis to develop the forecast.

Purpose of a Forecast

As mentioned earlier in the chapter, forecasts serve different purposes depending on who is using them. Our focus here, however, is the world of finance. In this realm, the key purpose of pro forma (future-looking) financial statements is to manage a firm’s cash flow and assess the overall value that the firm is generating through future sales growth. Growing just for the sake of growing doesn’t always yield favorable income for the firm. A larger top-line sales figure that results in lower net income doesn’t make sense in the grand scheme of things. The same is true of profitable sales that don’t generate enough cash flows at the right time. The firm may make a profit, but if it doesn’t manage the timing of its cash flows, it could be forced to shut down if it can’t cover the costs of payroll or keep the lights on. Forecasting helps assess both cash flow and the profitability of future growth. Managers can forecast cash flow using data from forecasted financial statements; this allows them to identify potential gaps in cash and plan ahead in order to either alter collection and payment policies or obtain funding to cover the gap in the timing of cash flows.

Link to Learning

Pro forma financial statements.

Review the video Business Plan and Pro-Forma Financial Statements to learn about the basics of pro forma financial statements and why they are helpful.

Length of a Forecast

Forecasts can generally be for any length of time. The length generally depends on the user’s needs. A one-year forecast, broken down by month, is quite typical. A firm will often go through a formal budgeting process near the end of its calendar or fiscal year to project financial plans and goals for the coming year. Once that is done, a rolling financial forecast is then done monthly to adjust as time moves on, more information becomes available, and circumstances change.

To be useful, the future forecast for financial planning purposes is almost always calculated as monthly increments rather than one total figure for the next 12 months. Breaking the data down by month allows finance managers to more clearly see fluctuations in cash flows in and out, identify potential gaps in cash flow, and plan ahead for their cash needs.

Forecasts can also be done for several years into the future. In fact, they commonly are. However, once the firm is looking out beyond 12 months, it gets difficult to forecast items with a great degree of accuracy. Often, forecasts beyond a year will be completed only to quarterly or even annual figures rather than monthly. Forecasts that far into the future are often strategic in nature, made more to communicate future plans for the firm than for more detailed decision-making and cash flow planning.

Common-Size Financials

As we saw earlier in the chapter, common-size analysis involves using historical financial statements as a basis for future forecasts. Financial statements provide a great starting point for analysis, as we can see the relationships between sales and costs on the income statement and the relationships between total assets and line items on the balance sheet.

For example, in Figure 18.6 , we saw that for the past two years, cost of goods sold has been 50% of sales. Thus, in the first draft of a forecast for Clear Lake, it’s likely that managers would estimate cost of goods sold at 50% of their forecasted sales. We can begin to see why forecasting sales first is crucial and why doing so as accurately as possible is also important.

Select Variables to Use

A simple way to begin a full financial statement forecast might be to simply use the common-size statements and forecast every item using historical percentages. It’s a logical way to begin a very rough draft of the forecast. However, several variables should be taken into consideration. First, managers must address the cost of an account and determine if it’s a variable or fixed item. Variable costs tend to vary directly and proportionally with production or sales volume. Common examples include direct labor and direct materials. Fixed costs, on the other hand, do not change when production or sales volume increases or decreases within the relevant range. Granted, if production were to increase or decrease by a large amount, fixed costs would indeed change. However, in normal month-to-month changes, fixed costs often remain the same. Common examples of fixed costs include rent and managerial salaries.

So, if we were to approach our common-size income statement, for example, we would likely use the percentage of sales as a starting point to forecast variable items such as cost of goods sold. However, fixed costs may not be accurately forecast as a percentage of sales because they won’t actually change with sales. Thus, we would likely look at the history of the dollar values of fixed costs in order to forecast them.

Concepts In Practice

Covid-19 makes forecasting difficult for big 5 sporting goods.

Big 5 Sporting Goods announced record earnings in the third quarter of 2020, attributing its huge success that quarter to the impact of people’s reactions to the COVID-19 pandemic. With so many people in quarantine still wanting to make healthy lifestyle choices, sporting goods stores were making record sales. Record-breaking sales, however, are not certain in the future. The impacts of the pandemic are extremely difficult to predict, making it a challenge for Big 5 Sporting Goods and other companies to assemble pro forma financial statements.

(sources: https://www.globenewswire.com/news-release/2020/10/27/2115470/0/en/Big-5-Sporting-Goods-Corporation-Announces-Record-Fiscal-2020-Third-Quarter-Results.html; https://finance.yahoo.com/news/investors-want-big-5-sporting-054658521.html; https://www.cpapracticeadvisor.com/accounting-audit/news/21206691/four-ways-covid19-will-impact-2021-financial-forecasting-and-planning)

Determine Potential Changes in Variables

So far, we have focused on using historical common-size statements to create a draft (not a final version) of the forecast. This is because the past isn’t always a perfect indicator of the future, and our finances don’t always follow a linear pattern. We use the past as a good starting point; then, we must assess what else we know to fine-tune and make adjustments to the forecast.

Many items impact the forecast, and they will vary from one organization to another. The key is to do research, gather data, and look around at the market, the economy, the competition, and any other factors that have the potential to impact the future sales, costs, and financial health of the company. Though certainly not an exhaustive list, here are a few examples of items that may impact Clear Lake Sporting Goods.

  • It has an old product line that was discontinued in early October, contributing to a 2% reduction in monthly sales that will likely continue into the new year until a new line begins arriving in stores.
  • It will be adding a new brand to its collection of fishing supplies in March. The manufacturer plans to begin running commercials in late February. Managers anticipate that this will increase Clear Lake’s monthly sales by about $500 in March, $1,000 in April, $1,400 in May, and $2,000 per month in June, July, and August.
  • The company has just finished updating its employee compensation package. It goes into effect in January of the new year and will result in an overall 4% increase in the cost of labor.
  • The landlord indicated that rent will increase by $50 per month starting July 1.
  • Some fixed assets will be fully depreciated by the end of March. Thus, depreciation expense will go down by $25 per month beginning in April.
  • There are rumors of new regulations that will impact the costs of importing some of the more difficult-to-obtain hunting supplies. Managers aren’t entirely sure of the full impact of the new legislation at this time, but they anticipate that it could increase cost of goods sold for the affected product line when the new legislation goes into effect in the last quarter. Their best estimate is that it could increase the overall cost of goods sold by up to 2%.

We will use all of this data later in the chapter when we are ready to compile a complete forecast for Clear Lake.

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  • Authors: Julie Dahlquist, Rainford Knight
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  • Publication date: Mar 24, 2022
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Ultimate pro forma template for Excel

pro forma in business plan

We’re living in some pretty uncertain times.

Over the past couple of years, supply chains have been totally redrawn, and businesses have been forced to evolve how and where they do business. In some cases, that’s created tremendous new opportunities organizations can leverage to chalk up some growth.

But to seize those opportunities, it’s essential to constantly look ahead. That’s where pro forma templates come in handy.

Pro forma projections are all about looking ahead to try and predict where finances are headed and how hypothetical scenarios could affect the bottom line. Fortunately, there are Excel templates that can help you achieve that — or even smarter solutions (more on this later).

This article will explain what a pro forma template is, share our custom pro forma template for Excel, and how monday.com can be used to boost sales forecasting abilities.

Get the template

What is a pro forma statement template for Excel?

When doing the books for a business, one of the most powerful tools is the “pro forma” statement. Pro forma — sometimes written as “proforma” — is a fancy Latin way to say “for form.” But how does that super ancient phrase in a dying (dead?) language relate to businesses in the 21st century?

In accounting, pro forma statements are a way to test out various business situations that might happen in the future. Looking at how those scenarios could play out makes it easier to prepare if they happen in real life.

A pro forma template helps teams understand what data is needed to model different scenarios based on pre-built questions. It’s as easy as “fill in the blanks,” … but this can still be pretty labor-intensive. There are plenty of pro forma statement templates in tools like Excel, Google Sheets, or even a Work OS like monday.com.

Download Excel template

Why use pro forma statement templates?

Pro forma financial statements look a lot like regular financial statements . The critical difference is that pro forma statements are based on “what-if” scenarios, not actual financial results .

Example: What may happen if a business receives a $150,000 loan? Run a pro forma! Produce a statement to look at how that debt would impact cash flow over a certain period.

Pro forma statements demonstrate to investors and lenders that a company is worth investing in. In addition, it’s easier to prove sustainability by presenting well-researched pro forma statements to a would-be stakeholder.

Likewise, pro forma statements make it easier to anticipate changes that could affect the business — for example, if the tax liability went up due to entering a higher tax rate.

That’s why pro forma statements are important. But why are pro forma templates important?

Simply put: they save a whole lot of time. Unless there is a full-time team of accounts with a lot of time on their hands, developing all of these pro forma templates can be time-consuming. It’s also challenging to know where to start.

A pro forma template means the job is already halfway done. The scenarios are already plotted out in spreadsheet form. All that’s left is to fill in the blanks to make the template unique to the situation.

What are some examples of pro forma statements?

There are 3 significant types of pro forma statements: pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.

1. Pro forma income statements

An income statement is one of the most critical financial statements in every accountant’s toolbox . It’s often referred to as a profit and loss (P&L) statement, and it summarizes all net income, net sales, and expenses over a given period.

Pro forma income statement

( Image Source )

A pro forma income statement starts like an ordinary income statement based on actual financials. But let’s say it’s important to see the impact of a 30% rise in costs (like energy price, rent, or property price). A pro forma means it’s possible to run this hypothetical scenario by inflating all of the items in the expense columns by 30%.

The resulting calculations would show how a rise would impact the company’s net profit.

2. Pro forma balance sheets

A balance sheet is a financial statement showing how much a company is worth according to its “book value.” It does this by listing out all of a company’s assets, liabilities, and owner’s equity for a given date. This date is referred to as a “reporting date.”

Like a pro forma income statement, a pro forma balance sheet would be created by building a balance sheet for a given date based on projected values. For example, create a pro forma balance sheet for 12 months in the future and populate the fields with projected asset values, liabilities, and equity in a year.

Pro forma balance sheet example

3. Pro forma cash statements

It’s used to show the company’s ability to operate in the long term and short term based on existing cash inflows.

A pro forma cash statement makes it easy to see how operating activities would be affected if your cash flows were to increase (or dry up).

Want to create a pro forma template in Excel? The process is straightforward. Start with one of Excel’s pre-built templates and enter all hypothetical numbers.

The trouble with this method is that it’s super manual — which is where monday.com’s Pro Forma Template comes to the rescue.

Pro forma cash statement example

The monday.com pro forma template for Excel

The monday.com pro forma template is all about helping shake the habit of reactive financial management. With the help of our easy-to-create automations and custom rules, proactively setting up all sorts of hypothetical scenarios will run all day, every day.

Simply import financials and then use the dashboard on the Pro Forma Template to choose various custom scenarios.

Pro Forma Statement Chart

This template allows for the following:

  • Create pro forma income statements, pro forma balance sheets, and pro forma cash flow statements.
  • Easily edit each model; easily change the data to make new predictions. Then, make pro forma adjustments based on new information.
  • Generate financial ratios.
  • Compare multiple pro forma statements and hypothetical ratios side-by-side to help find opportunities, reduce risk, and increase profits.

Want a more interactive experience than using an Excel spreadsheet , something you can easily update in real-time across multiple team members? Consider using the template for monday.com. Then, benefit from all the other supercharged features a Work OS (operating system) brings. 

Get access to advanced real-time analytics into the cost, project, and task management processes, custom reports, and detailed real-time charts to help the team and other stakeholders visualize budget and project progress.

With permission controls, external stakeholders only can view the template, letting the accounting team change any numbers to avoid accidents.

Related templates

Budget tracking template.

The Budget Tracking Template is another way to get a clear picture of the organization’s spending and forecast how those expenses will impact the bottom line.

Like the Expense Tracking Template, the Budget Tracking Template is fully customizable — add action items, reorder based on priority, and create a tailored plan.

CRM Template

monday.com’s CRM Template isn’t just about pro forma financial projections. It’s an all-in-one solution that helps effectively capture leads, look at future sales and financial ratios, and manage contacts.

CRM template on monday.com

It can also easily forecast revenue, generate sales insights, and help determine where to focus finances and goals. Create projections around operating expenses and net sales, effectively manage resources, assign tasks to team members, and communicate with multiple teams in real-time.

FAQs about the pro forma statements

Q: how is a proforma in excel created.

A: Excel comes built-in with several pro forma templates to simply fill in the blanks to streamline the pro forma modeling process.

Creating a pro forma statement in Excel from scratch is pretty straightforward. First, make a typical financial statement, such as a cash flow statement. Then, choose one column to amend with hypothetical figures to match various scenarios.

Q: What is a pro forma Excel sheet?

A: A pro forma Excel sheet is a hypothetical financial statement created in Microsoft Excel. These sheets are essentially ordinary financial statements populated with actual and hypothetical financial figures.

Use these sheets to predict how certain events will impact the business.

Q: Does Google Sheets have a pro forma template?

A: There are several built-in financial statement templates on Google Sheets. Although these statements aren’t labeled “pro forma,” they can be utilized as standard financial statement templates on Google Sheets and then populated with projected figures to run various scenarios.

Several third-party sites offer links to pre-built pro forma templates they’ve designed.

Q: Does Excel have financial templates?

A: Yes. Excel has a range of financial templates, including income statements, cash flow statements, and balance sheets.

Q: Why are pro forma statements important?

A: Pro forma statements help you show investors and lenders how the business would fare in specific financial scenarios.

They also help make better-informed business decisions and prepare for worst-case scenarios by understanding how certain variables impact the company’s operations.

Q: What are the 3 benefits of creating a pro forma?

A: Creating a pro forma leads to 3 key benefits:

  • Better understand how various scenarios would impact the business.
  • Plan for adverse scenarios so they don’t disrupt operations.
  • Attract investors and lenders by demonstrating how sustainable the business model is.

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Telling the future – the power of the pro forma in small business.

Telling the Future with Pro Forma

As business owners, we have many unique skills and talents. But did you know you also have the ability to tell the future? Okay, so, you’re not likely to predict the next winning lottery numbers. However, you can predict (or project) your company’s financials over the next few years with pro forma. You see, knowing what the future could bring, empowers you to take immediate action that can hasten or prevent certain scenarios from taking place. That’s exactly what pro forma statements can do for your business. Think of them like the Polaroid photo in the film, Back to the Future. Just like Marty McFly, you can use that snapshot (pro forma) to see how the actions taken today will affect the future. In this entry, I want to dig deep into the power and value of pro forma.

Follow Along With The Financially Simple Podcast!

This week on The Financially Simple Podcast:

  • (1:48) What is Pro Forma?
  • (2:35) Pro Forma calculation
  • (5:03) Budget documents
  • (5:24) Company income statements
  • (6:24) Earnings projections
  • (10:53) Secure funding
  • (11:51) Inspire confidence in prospective buyers
  • (13:38) Assessing M&A and risk analysis

Tapping into the Future of Your Business with Pro Forma

Before we dig in to the heart of the subject, let’s get the academics out of the way. What is pro forma? Put simply, it’s a Latin term meaning, “for the sake of form” or “as a matter of form.” Investopedia describes it as “A method of calculating financial results using certain projections or presumptions.” However, it’s important to note that they aren’t always calculated using generally accepted accounting principles (GAAP). They could contain adjustments to emphasize important factors of the company’s operating performance. So, how are pro forma statements calculated?

pro forma worksheet download

To make your calculations, follow these steps:

  • Pro Forma Forecasting . Estimate your total monthly income. You can adjust this for seasonal sales cycles (i.e. higher or lower sales volumes). Remember, it’s best to be conservative with these estimates.
  • Estimate expenses based on industry-specific ratios, then multiply your sales total by the percentage of sales for each expense category. This will yield your future net income (NI) .
  • Review each line and determine how many transactions you would need to execute to achieve your projected numbers. Repeat this process until the numbers make sense for your business.

Types of Pro Forma Documents

There are several types of Pro Forma documents. Each one can tell a different story and provide unique benefits. These common types can help you get a crystal clear look at your business.

Budget Documents

Budgets aren’t anything new. The principles remain the same regardless of the type of budget you’re creating. Start with a set amount of funds and direct them where to go. It really is as simple as that. However, you can create pro forma budget documents to help you plan for specific projects or departments. The only real difference is that you’ll use some hypothetical scenarios when creating your budget.

While based on some assumptions, pro forma budgets also look at past expenses and revenue to inform your company’s fiscal plans for the year.

Company Income Statements

Company income statements are another area where pro forma can help. If you’re trying to attract potential investors with your growth, you could use pro forma to show how you’re poised to increase revenues. Typically, you would use the pro forma calculation method and draw their attention to specific numbers. For example, you might report your actual numbers from the previous quarter while also highlighting your projections for the current quarter.

Earnings Projections

You can also use pro forma to inform your investors of how changes to the business are expected to impact its earnings and expenses. This is especially useful when you’re considering a merger, acquisition, or making a change to the leadership in your company. Forecasting your earnings will show you and investors how the business could benefit from such a move. Conversely, if you find that it could negatively impact the business, you can make an informed decision to back out of the deal.

But what is the real power of pro forma in your business?

Just like Marty McFly, you can use that snapshot (pro forma) to see how the actions taken today will affect the future.”— Justin Goodbread

Additional Benefits to Your Business

It may seem obvious that pro forma statements can provide the necessary data for planning, but they can impact your business in much larger ways. Let’s look at some of the potential benefits of pro forma.

Secure Funding

Through the pro forma calculation, you’re able to make realistic projections surrounding the potential growth of the organization. Potential investors will pay close attention to your pro forma numbers to get an idea of your business’s trajectory. If you use correct assumptions in creating your pro forma, you can demonstrate viable growth, making your business attractive to investors. Pro forma statements are often required by banks because they show that you have a keen understanding of the operations of your business, as well as provide crucial information about your ability to make payments while running the business.

Instilling Confidence

A well-done pro forma also inspires confidence in prospective buyers. As you probably know, I sold my business recently. As the buyers examined my financials, they keyed in on my five-year pro forma projections. I had accurately projected the business’s growth and revenue to within $30K. As a result, the buyers were extremely confident that the company could reach its future growth goals. In fact, they thought it was funny to see that I was upset about my projections being off by a “meager” $30K.

Making Sound Decisions

Similarly, pro forma statements can help you determine when a merger or acquisition makes sense. If you’re considering a strategic M&A, pro forma can help you identify redundancies and additions that will need to be made. For example, you probably won’t need two HR departments. But pro forma can also show you what a merger might look like from a financial perspective, therefore, allowing you to proactively develop solutions to problems that could arise from combining the two entities.

Risk Analysis

Finally, pro forma statements are a powerful tool in risk analysis. Because pro forma deals with some hypothetical (yet well-informed) situations, it gives you the unique ability to test different scenarios. By changing a few key factors, you can identify risks in your planning well before they have the chance to be realized. This enables you to come up with best and worst-case scenarios for your business. Likewise, you can apply your findings to your strategic plans to mitigate potential risks or even turn them into opportunities.

Wrapping Up…

Friends, I bet you didn’t know you could see the future! With the power of pro forma, you can. As you can see, taking stock of your historical financial data to project the trajectory of your business can help in many ways. If you haven’t used pro forma in your business, there’s no better time than now. Using the principles of the pro forma calculation method, you can take a glimpse into the future and create or adjust plans to reach your business goals.

Look, life is hard but it’s still so good. Tracking the future of your business can be frustrating but it doesn’t have to be. With the power of pro forma , we can at least make forecasting at least, financially simple. Let’s go out and make it a great day!

Do you have questions about this or other business and financial topics? Could you benefit from an expert review of your pro forma calculations? Reach out to our team . We’re here to help.

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How to Create Pro Forma Financial Statements

March 14, 2023

14 min read

by Casey Clark

CEO, Co-Founder

Chicago, IL

As a business partner, he helps his clients get a holistic view of their financial health by slowing down to talk about numbers. Then, he breaks down even complex problems into one or two elements to help them break through their barriers of growth.

It’s impossible to predict the future performance of your company, but a pro forma income statement is an asset that can help. In Latin, “pro format” means “for the sake of the form”. A pro forma financial statement is a way to forecast your future earnings over a particular period. By using historical financial statements and your projected cash flow, you can help determine how your business will perform in various scenarios.

At Cultivate Advisors, our revenue management consultants can help you put together a pro forma income statement to give you confidence and insight into how your company will perform in various scenarios. 

What Is a Pro Forma Financial Statement?

Pro forma statements utilize hypothetical data or assumptions about the future values of your company to project performance. A pro forma statement doesn’t use generally accepted accounting principles (GAAP) and typically excludes one-time expenses that aren’t part of standard operating expenses, such as any restructuring costs following a merger. If a company believes an expense obscures the accuracy of its financial outlook, it can be excluded when factoring in financial projections. 

Why Does Your Business Need a Pro Forma Financial Statement?

pro forma financial statements

In addition to understanding how to make a pro forma income statement, companies also need to know the reasoning behind creating pro forma statements. There are many benefits to doing so in predicting the accuracy of future periods, including:

  • Allows you to better plan for the future by factoring in the best, worst, and most likely scenarios in greater detail;
  • Shows investors or lenders how you would leverage their money to help grow your business in a sustainable way;
  • Helps you anticipate changes to your cash flow statements as your business grows, such as financial documents that revolve around entering a new tax bracket;
  • Pinpoints financial limitations of which you should be aware.

In accounting, pro forma total expenses are usually used in a financial forecast that can help with financial modeling. 

Pro Forma Statements vs. Budget: What Is the Difference?

You might be wondering how a pro forma balance sheet differs from a budget, as it’s likely tempting to think about the two as the same thing. Although the two documents share commonalities, they are two distinct financial tools that you can use to benefit your business.

Another simplistic way to think about a budget versus a pro forma is that a budget is a set plan while a pro forma is more of a prediction. It’s possible that your budget is based on the financial information that’s found in your pro forma statement. This makes sense, as you’ll want to make plans based on your predictions.

For example, let’s say your business has an income this year of $100,000. Based on your pro forma annual income statement, next year’s income will be $107,000. When you are putting together the budget for next year, you can factor in that $7,000 difference.

Pro Forma and GAAP Financials: What Is the Difference?

what is a pro forma

As there are no official rules when it comes to putting together pro forma income statements, investors must distinguish the difference between those and statements using generally accepted accounting principles (GAAP) or standard accounting practices. There are strict guidelines when using GAAP while pro forma income statement figures are seen as hypothetical. 

4 Main Types of Pro Forma Statements

There are four main types of pro forma statements that you can use to manage your cash flows and the financial health of your business.

  • Pro forma balance sheets : This is similar to a traditional balance sheet as it shows the accounts receivable, your cash flow statements, and other pertinent financial information. Business decisions and a business plan can be made based on this information.
  • Pro forma cash flow : Another type of pro forma document is a pro forma cash flow that shows both you and potential investors the outflows and inflows of your company’s financial results within a set period that you determine. For example, it might cover a quarter or a fiscal year.
  • Pro forma earnings : Using a pro forma earnings report can help you predict how your revenue will change in the upcoming year. It’s the inverse of a total expenses projection and allows you and key decision-makers to plan for various changes in your net income.
  • Pro forma total expenses : This allows you to predict how your operating expenses will change in the year ahead.

Purposes of Pro Forma Statements

As we discussed, there are four essential types of pro forma statements, but there are slightly different scenarios for each. The purpose of the financial forecast will impact which one you choose.

1. Full-year Pro Forma Projections

A full-year projection factors in all of your financials for the fiscal year up until the present time. It then adds your projected cash flow outcomes for the remainder of the year. This allows you to showcase to partners or investors the potential of the business finances by the end of the fiscal year.

2. Financing or Investment Pro Forma Projections 

If you’re talking to multiple investors to get their capital investment or you’re striving to convince your business partners that there’s value in additional financing, you should use a financing pro forma projection to help establish your case and outline the risk analysis. This factors in an additional cash flow from an outside source in addition to any interest payments that are factored in. It displays how this will impact your business’s overall financial position.

3. Historical with Acquisition Pro Forma Projections 

As the name suggests, this pro forma projection considers the previous financial statements of your company in addition to the past financial statements of a company that you are hoping to purchase. It combines these numbers to showcase what your financials would have looked like in the case that you combined businesses earlier. You can use this data from the proposed transaction as a guide to what your projected income statement would be in the future and restructure from there.

4. Risk Analysis Pro Forma Projection 

Examining both the best-case scenario and the worst-case scenario of your financial decisions, it helps you better prepare for the potential challenges that you might see in the future. For example, what if the estimated tax rate changes or you purchase new equipment that impacts you in the long run?

How to Make a Pro Forma Income Statement

how to make a pro forma income statement

Generally speaking, to create a pro forma income statement, you’ll want to follow the below five steps.

  • Start by setting a sales goal for the particular time period at which you’re looking. In our example, let’s say you want to increase your income by $12,000 over the course of one year.
  • Set a production schedule that allows you to reach your goal and map it out over the covered time period. In this case, you’ll need to make an extra $1,000 every month to meet your goal.
  • Then you’ll want to map out how you’ll match your production schedule to achieve your goals. There’s more than one way to do this; you can achieve this by increasing your number of sales by a fixed amount each month, or you can do so in a gradual way. Your experience as a business owner can guide you in the right direction.
  • At this point, you’ll want to factor in the loss by determining the cost of goods sold for every month within your projection. From there, deduct that number, as well as any other operating costs, from your overall sales.
  • Finally, prepare your pro forma income statement using the above data that you’ve compiled.

As a pro tip, you’ll always want to ensure that your bookkeeping is up to date, including your gross profit and your net cash flow, as it allows you to come up with more accurate data. You can also use a   cash flow projection tool for guidance.

How to Create a Pro Forma Cash Flow Statement

In order to create a pro forma cash statement, there are five general steps that you can follow:

  • Start by setting a sales goal for the particular period that you’re considering. For example, maybe you are looking at a year, and you want to increase your income by $12,000 during this time.
  • Next, set a production schedule that allows you to reach your goal and project it over that same time period. In the case of our example, you would need to earn an additional $1,000 every month for the next 12 months.
  • Then, determine how you can match your production schedule. For example, you can do so by increasing your sales amount by a set amount monthly, or you can do so gradually. Utilize your expertise as a business owner.
  • Make sure to calculate the “loss” portion of your “profit and loss.” To do so, calculate the cost of goods sold every month and deduct this number from your sales. If there are other expenses, these should be deducted.
  • You’ll be able to prepare your pro forma income statement using the above information.

You can also use a cash flow projection tool to guide you through this process. 

How to Create a Pro Forma Balance Sheet

how to create a proforma

Start by taking the information from your income statement and using the cash flow statement to determine where your money is going. This statement can be part of a larger cash flow that’s used for financial accounting and decision-making.

This projected cash flow allows you to see whether you’ll have excess money to spend on things such as paying off loans or saving for an upcoming investment. 

How Cultivate Advisors Can Help

With Cultivate Advisors , we can help you navigate your pro forma expenses and leverage them to benefit your business. Whether you need help with your pro forma gross profit or you’re looking for information on an investment pro forma projection, we are here to help! Reach out to our revenue management consultants to get started. 

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Pro Forma Template: What Are They? How To Use Them

Jump to section, what is a pro forma template.

A pro forma template, also known as a pro forma financial statement, is a document used to project future financial performance based on hypothetical scenarios. In the context of accounting, pro forma templates will help you make decisions based on hypothetical scenarios as well.

They can also help you formulate a business plan , obtain investor funding, and more. By having a pro forma template ready, you can create your financial documents faster and more uniformly every time you need them.

Understanding A Pro Forma Statement

There are numerous types of pro forma documents. They may be required in certain situations, such as for public companies or during mergers and acquisitions. More or less, pro forma templates exist to give you a jumpstart on understanding your company’s financial health at a glance or when presenting to board members and stockholders.

You can use a template to create the following types of financial documents:

  • Income statements
  • Balance sheets
  • Cash flow statements
  • Owner’s equity statements
  • Notes to financial statements
  • Annual pro forma projections
  • Investment projections
  • Risk analysis

While pro forma templates are relatively straightforward to use, ensure that you seek legal advice from corporate lawyers to help you develop the right set of templates the first time you draft them. For some pro forma templates, ensure that they meet all applicable accounting rules, including GAAP principles and state laws.

pro forma in business plan

Using A Pro Forma Template

The first step you should take with a pro forma template is to save a master copy of it in a safe, accessible location. There is always a chance for deletion across numerous duplications and file changes, which means that you should save it on a flash driver, external hard drive, or in the cloud. In case it gets deleted, you always have the original to back you up.

After saving your pro forma template, you will then take the following steps when using it:

  • Use a form to help you automatically collect information entered into the template
  • Enter financial data to help forecast income and cash flow
  • Create different scenarios to map out how cash flow is affected as variables change
  • Share it with an expert to make sure you are using it properly
  • Make a copy of the original to avoid an accidental deletion
  • Consider naming conventions for your files by statement type

The use of a pro forma template depends upon the type you are using. Some provide you with blank space to enter specific values, while others are just a set of guidelines. By inputting these variables, you can calculate your profit and loss under the template’s author’s guidelines.

As you can see, pro forma templates are simply financial documents that you can use for everyday business needs. It is imperative that you hire incorporation lawyers for specialized projects or one-time needs. Not addressing the critical details of business documents can negatively impact you.

ContractsCounsel Pro Forma Template Image

Image via Pexels by Lukas

Pro Forma Template Samples

There are numerous resources available online regarding the development of pro forma templates that you case use to report on your business’s financial health. Spend some time looking for the right sample since several do not always address specific business needs.

Here are three templates that you can view online:

  • Smartsheet pro forma template sample
  • Freshbooks pro forma template sample
  • Spreadsheet 123 pro forma template sample

When using these templates, you can generally input the data you need to populate complete financial statements. However, you will not own the software that stores the templates, which means you need to download updates every time. There are several ways and methods available to make your own pro forma template to consider.

You should also be able to easily edit your pro forma template since you will need to update your associates, employees, and investors on-the-fly occasionally. The most straightforward way to make your pro forma is by ensuring that you have your business objectives in mind first.

How Do You Make Your Own Pro Forma?

The best way to make your own pro forma statement template is by starting with the right type of document in the first place. You can find samples online or hire corporate lawyers to draft the templates you use to create financial statements.

However, here are the next steps forward that you can take to make your own pro forma templates:

  • Review pro forma template samples to establish what should go into your financial documents
  • Consider the elements that should be included in every statement
  • Set a goal for sales over certain period of time
  • Figure out how much the cost of production will be to support those sales
  • Consider all other costs associated with running the business
  • Add all of these financial data points to the model to predict net cash flow
  • Set-up periodic reviews of your pro forma templates to ensure that they are still up-to-date

If you decide to find a pro forma template online, seek advice from a trusted colleague or attorney. Online templates tend to miss some critical notes when it comes to personalization and customization of your needs. However, some can be customized to your needs. The process of finding the right pro forma template can be frustrating, especially when there are question marks in your mind.

Simply put, it is more cost-effective to hire corporation lawyers the first time around you are drafting pro forma templates. Doing so will save you money, time, and stress over the long-run. You can even use planning with pro formas to start your business by hiring corporate lawyers to draft your documents instead of relying on templates created for hypothetical organizations or those serving other industries.

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Planning With Pro Formas To Start Your Business

In the previous section, we addressed the importance of legal advice. However, the cost of hiring an attorney or vetting one can turn many business owners away from engaging in this critical part of the process. Keep in mind that legal mistakes can come back to haunt you later, which means that it is essential to get your pro forma templates right from the first day you use them.

ContractsCounsel has made this process as easy as possible on business owners:

  • Sign up for our service at no cost
  • Post your project to our platform
  • Begin receiving proposals from licensed and vetted attorneys

That is it. From one single location, you can receive numerous proposals and prices for your pro forma template project. Not only is the process convenient, but it also satisfies the need to draft your templates correctly and adequately for your jurisdiction while keeping your financial statements more uniform.

Working With A Lawyer For Business Formation

When starting a business, you will need to file Articles of Incorporation with your secretary of state’s office to receive a Certificate of Incorporation . However, there may be other entities that are better suited for your situation, and other legal requirements may apply, including the drafting of an operating agreement .

Working with a lawyer for a business formation is smart since you will effectively and efficiently avoid making legal mistakes, negatively impacting your company’s future. Corporate lawyers also have the experience and capacity to determine which documents you may need to stay compliant and prevent future disputes with clients, contractors, partners, and other third-parties you serve.

Get Pro Forma Template Help with ContractsCounsel

Instead of leaving your pro forma templates to basic internet searches and best guesses, get the right document that you need the first time around. Sign up for ContractsCounsel today with no upfront cost to you and start receiving proposals today.

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Pro Forma: Understanding Its Application in Business Financial Analysis

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pro forma

Pro Forma Definition

“Pro forma” is a Latin term that means “for the sake of form” and, in finance, it refers to a method of calculating financial results using certain projections or modifications. It is often used to present a hypothetical financial situation, such as a company’s earnings if a certain event such as a merger, acquisition, or new capital investment were to occur.

Pro Forma in Forecasting and Budgeting

In financial management, pro forma plays a vital role in forecasting and budgeting. It allows organizations to prepare and plan for future financial circumstances. The key advantage of using pro forma in this context is to anticipate both future revenues and expenses.

Estimating Future Revenues

By developing a pro forma income statement, businesses can predict potential revenues. This forecast considers existing and upcoming sales, market circumstances, and strategic initiatives. Here, pro forma figures aren't just guesswork – they're grounded in detailed research and analysis.

Companies examine historical data, present trends, and future projections before deciding on the most probable income. Ensuring these estimates are as precise as possible allows for a realistic view of future financial health.

Budgeting Expenses

A pro forma statement is not merely beneficial in revenue prediction – it's equally significant in expense budgeting. Pro forma budgeting assists businesses in estimating future costs with a high degree of precision.

Expense budgeting involves predicting operating and non-operating expenses. Companies can determine potential costs, such as labor, rent, utilities, interest payments, and other overhead expenditures.

Overall, pro-forma-based budgeting serves as a preventive measure against overspending. By developing a detailed pro forma budget, companies can formulate an effective strategy to maintain cost efficiency and promote financial stability.

To summarize, pro forma serves as an important tool in forecasting and budgeting. It enables businesses to estimate future profits and budget expenses more accurately, ensuring long-term financial well-being.

Pro Forma Financial Statements vs. GAAP

Revenue recognition.

The method of revenue recognition in pro forma financial statements and GAAP varies significantly. In pro forma, firms may recognize revenue once the order is placed rather than when the cash is received or the service is delivered. This is in authorized anticipation of a sale and in accordance with Non-GAAP guidelines, making it possible to provide a more ideal financial outlook to investors.

On the other hand, GAAP requires revenue to be recognized when earned and realizable. This might be when a product is delivered or a service has been provided, ensuring the revenue is indeed earned and not merely anticipated, providing a safer, more realistic representation of a firm's financial health.

Expense Recognition

With respect to expense recognition, pro forma statements often exclude certain types of expenses considered non-recurring or extraordinary, such as restructuring costs, litigation charges, or costs associated with a merger or acquisition. This can inflate income figures, presenting a rosier financial picture than what truly exists.

However, under GAAP, all ordinary and extraordinary expenses have to be recognized in the period they are incurred. This ensures an authentic representation of the costs a firm incurs to generate its reported revenues. Consequently, financial statements under GAAP typically look less optimistic in comparison to pro forma statements.

Presentation of Financial Positions

Pro forma financial statements provide a “what-if” scenario analysis about the potential financial status of the company assuming certain changes in its activities. It allows the presentation of business plans or strategies which if implied, will have an impact on the firm's cash flow, profits, and overall financial strength.

Conversely, GAAP financial statements refer to the true, historical representation of the financial position. These financials are based on actual business transactions of a company for a given time period. They show reliable and consistent information which is comparable across different periods and companies.

While both pro forma and GAAP financial statements have their uses, they should ideally be viewed in tandem, to provide both a hopeful outlook as well as a realistic grounding of a company's financial standing for informed decision making.

Advantages and Disadvantages of Using Pro Forma Statements

Pro forma financial statements offer several key benefits, particularly for internal management. These statements provide leaders with a forward-looking tool, enabling them to make strategic decisions with a focus on future projections.

Benefits of Pro Forma Financial Statements

One of the primary advantages of pro forma financial statements is their facilitation of strategic planning . By offering a forecast of financial results, these documents can guide internal management in aligning their strategies with their financial aspirations.

Another crucial benefit is the role these statements play in scenario analysis . They allow organizations to model various business scenarios and examine their potential financial outcomes. This can be immensely helpful during pivotal periods, such as budget planning or significant operations adjustments.

Pro forma statements also promote enhanced communication within an organization. For instance, they can aid in clarifying budget numbers or conveying potential financial consequences associated with specific business decisions.

In addition to internal use, many organizations use pro forma statements as a tool for attracting investors , by showcasing projected profitability under certain conditions or following potential strategic moves.

Limitations of Pro Forma Financial Statements

Despite these significant benefits, pro forma financial statements also have limitations. One of the most critical of these is their lack of standardization . Unlike other financial statements, there are no set guidelines or standards governing the creation of pro forma statements. This lack of regulations may lead to inconsistencies in how different organizations prepare and present these documents.

Another significant limitation is their potential to mislead investors . As the figures presented in a pro forma statement are often based on hypotheticals or assumptions, they may fail to accurately represent a company's actual financial position. If the assumptions prove incorrect, the projections will invariably be inaccurate. This risk can create a disconnect between investor expectations and the reality of a company's fiscal health.

In conclusion, while pro forma financial statements are powerful strategic tools for businesses, their effectiveness and credibility heavily rely on the validity of the underlying assumptions and the integrity of the organization compiling them. Given these advantages and challenges, users of pro forma statements should interpret them carefully, viewing them as a potential outlook rather than a firm guarantee of future performance.

Regulatory Issues Regarding Pro Forma

Public companies in the United States using pro forma financials must adhere to certain regulations, primarily issued by the Securities and Exchange Commission (SEC). The SEC is an agency designed to protect investors by regulating and controlling securities transactions.

The SEC Rule 10b-5

Under this rule, the SEC prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security. Despite pro forma financials' theoretical conformance to GAAP (Generally Accepted Accounting Principles), concerns arise when companies use them selectively or misleadingly. Manipulating the presentation of financial information, even if technically accurate, could be considered an attempt to deceive investors, potentially triggering infringement of Rule 10b-5.

Regulation G and Item 10(e) of Regulation S-K

These regulations specifically focus on non-GAAP financial measures, such as pro forma. According to Regulation G, a public company that discloses non-GAAP financial measures must also present the most directly comparable GAAP measures and reconcile the two. Meanwhile, Item 10(e) of Regulation S-K sets forth additional restrictions for these disclosures in SEC filings and earnings releases.

But compliance with these stipulations doesn't guarantee absolute accuracy or honesty. Companies might exclude certain expenses to paint an artificially rosy picture of their performance, counting on the general public and some investors being unaware of what has been left out.

Enforcement Actions and Penalties

In case of violation of these regulations, the SEC can take enforcement action against the offending company. The SEC has the power to seek a court order requiring the company to comply with the laws, can levy fines, and even ban individuals from acting as officers or directors of public companies.

These regulatory measures indicate that while pro forma can be a useful tool, it is essential for users to understand the context and potential for manipulation. Always take a thorough and critical look at pro forma figures and the explanations provided by the company.

Pro Forma in Mergers and Acquisitions

In the context of mergers and acquisitions (M&A), pro forma financial statements play a critical role in providing stakeholders with a glimpse into the potential financial situation of the combined entities. Particularly, these provide a forecast of the future financial position by integrating the historical financial information of both companies.

Role of Pro Forma in M&A

During M&A, pro forma financials can contribute in several ways.

They help in evaluating the economic viability of the merger or acquisition and assist the management to understand the possible financial outcomes. Pro forma statements exhibit how the transaction would affect the revenues, expenses, and ultimately the company's bottom line. They also give a sense of what synergies might be realized post-transaction by eliminating overlapping costs or leveraging shared resources.

Pro Forma Financial Statements

Generally, three main financial reports are used in the pro forma analysis: the income statement, the balance sheet, and the cash flow statement.

The pro forma income statement combines the income statements of both companies, adjusts for items such as cost savings or restructuring charges expected as a result of the transaction. Similarly, the pro forma balance sheet combines the balance sheets of both entities and accounts for purchase price allocation adjustments, which may be to goodwill, other intangible assets, or deferred taxes. Lastly, the pro forma cash flow statement uses inputs from the pro forma income statement and balance sheet to project the combined entity’s future cash flows.

Valuation Techniques

Pro forma financials feed into valuation techniques such as the Discounted Cash Flow (DCF) model or comparative company analysis, which assists investors and stakeholders in concluding a fair price for the transaction.

Delayed Effects

Keep in mind that pro forma figures will not always precisely reflect actual results due to unforeseen changes in the economic environment or implementation of the merger or acquisition.

Importance of Transparency

Transparency in creating pro forma financials is crucial to avoid misleading investors. The SEC (Securities and Exchange Commission) closely monitors the proper disclosure of these estimates, and any misleading or fraudulent representations can lead to severe penalties.

Ultimately, pro forma financials allow potential investors, company management, and other stakeholders to make informed decisions about the desirability and impacts of a potential merger or acquisition.

Implications of Pro Forma on Corporate Social Responsibility (CSR)

In the intersection of pro forma financials and CSR lies the ability of businesses to anticipate the financial outcomes of their social responsibility decisions and activities. Here, the robust forecast flexibility provided by pro forma can prove invaluable in planning and executing CSR initiatives.

Utilizing Pro Forma in CSR Strategy

To begin with, companies may decide to incorporate a certain CSR initiative into their operations. Such a decision has inherent financial implications – both immediate and future-oriented. However, these monetary outcomes are not always easy to forecast with traditional methods due to the complex interplay between business performance and societal impact.

By leveraging pro forma, businesses can create hypothetical yet realistic financial statements that consider present conditions as well as future occurrences. These assumptive financial statements help businesses understand the immediate financial implications of a CSR initiative, such as the costs related to the implementation of a new green technology.

Long Term Implications

Apart from immediate financial implications, pro forma allows companies to project the long-term financial effects of their CSR initiatives as well. For instance, the aforementioned green technology may result in long term savings due to reduced energy consumption. Pro forma can be used to model these long term savings, providing a more holistic view of the CSR initiative's financial implications.

Investor Relations

Another aspect where pro forma plays a helpful role in CSR is investor relations. Investors are increasingly interested in the CSR record of companies not only for ethical reasons but also as a measure of risk and potential profitability. By using pro forma to demonstrate prospective financial results of CSR initiatives, businesses can provide reassurances to investors about the profitability or financial viability of these initiatives.

Cautionary Note

However, it's pertinent to remember that while pro forma provides flexibility and depth in financial forecasting, it isn't a silver bullet. The hypothetical scenarios it crafts depend on the accuracy of the underlying assumptions. Therefore, careful attention must be given to these assumptions when using pro forma to forecast CSR financial implications.

Thus, pro forma can serve as a potent tool for businesses to plan and execute CSR initiatives by offering a comprehensive representation of their financial implications. However, the effectiveness of the method ultimately relies on the quality and realism of the underlying assumptions.

Sustainability and Pro Forma

In keeping with the policy of integrating sustainability-related costs and revenues into pro forma financial statements, businesses commit to sustainable practices that reflect in their monetary matters. This refers to activities such as resource management or waste reduction that are beneficial for both the environment and the company's profit margins.

Incorporating Sustainability Cost

Consider a company transitioning from non-renewable to renewable energy sources for its operations. In such a case, the initial setup cost for the new resources can be substantial. Yet these expenses are typically one-time investments, after which the company can anticipate potential savings due to lower running costs. Recording these factors in pro forma income expenses can provide a more realistic forecasting model for the company's future.

Revenue from Sustainable Practices

Similarly, the revenue side of financials can often benefit from sustainable practices. Companies producing eco-friendly products can attract a growing consumer base increasingly conscious about environmental issues. Appealing to such market trends can directly impact the sales and profitability of a company. When estimating future income in the pro forma statement, these potential revenues should also be included.

In all, implementing sustainable practices can have a significant effect on a company's finances. By integrating these costs and projected revenues into pro forma financial statements, businesses get a deeper understanding of how sustainability influences their operation.

Planning for Long-term Impacts

Aside from understanding current costs and benefits, pro forma statements that reflect sustainability efforts also enable businesses to plan for long-term impacts. When an organization commits to sustainable practices, it's considering its lasting impact on the world. This approach often yields long term financial benefits, like energy cost savings or tax incentives. Thus, integrating sustainability into financial planning is not just a moral obligation; it's a strategic long-term decision that drives value for businesses and their shareholders.

Through pro forma statements that incorporate sustainability, companies better anticipate future responses to changes in business practices; fully understanding the financial impacts, devising strategies to maximize gains, or mitigate losses from such sustainable practices. This approach allows businesses to be ahead of the curve, financially prepared and strategically equipped to handle the unforeseen eventualities of sustainability initiatives.

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  • Building Your Business

How To Create Financial Projections for Your Business

Learn how to anticipate your business’s financial performance

pro forma in business plan

  • Understanding Financial Projections & Forecasting

Why Forecasting Is Critical for Your Business

Key financial statements for forecasting, how to create your financial projections, frequently asked questions (faqs).

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Just like a weather forecast lets you know that wearing closed-toe shoes will be important for that afternoon downpour later, a good financial forecast allows you to better anticipate financial highs and lows for your business.

Neglecting to compile financial projections for your business may signal to investors that you’re unprepared for the future, which may cause you to lose out on funding opportunities.

Read on to learn more about financial projections, how to compile and use them in a business plan, and why they can be crucial for every business owner.

Key Takeaways

  • Financial forecasting is a projection of your business's future revenues and expenses based on comparative data analysis, industry research, and more.
  • Financial projections are a valuable tool for entrepreneurs as they offer insight into a business's ability to generate profit, increase cash flow, and repay debts, which can be attractive to investors.
  • Some of the key components to include in a financial projection include a sales projection, break-even analysis, and pro forma balance sheet and income statement.
  • A financial projection can not only attract investors, but helps business owners anticipate fixed costs, find a break-even point, and prepare for the unexpected.

Understanding Financial Projections and Forecasting

Financial forecasting is an educated estimate of future revenues and expenses that involves comparative analysis to get a snapshot of what could happen in your business’s future.

This process helps in making predictions about future business performance based on current financial information, industry trends, and economic conditions. Financial forecasting also helps businesses make decisions about investments, financing sources, inventory management, cost control strategies, and even whether to move into another market.

Developing both short- and mid-term projections is usually necessary to help you determine immediate production and personnel needs as well as future resource requirements for raw materials, equipment, and machinery.

Financial projections are a valuable tool for entrepreneurs as they offer insight into a business's ability to generate profit, increase cash flow, and repay debts. They can also be used to make informed decisions about the business’s plans. Creating an accurate, adaptive financial projection for your business offers many benefits, including:

  • Attracting investors and convincing them to fund your business
  • Anticipating problems before they arise
  • Visualizing your small-business objectives and budgets
  • Demonstrating how you will repay small-business loans
  • Planning for more significant business expenses
  • Showing business growth potential
  • Helping with proper pricing and production planning

Financial forecasting is essentially predicting the revenue and expenses for a business venture. Whether your business is new or established, forecasting can play a vital role in helping you plan for the future and budget your funds.

Creating financial projections may be a necessary exercise for many businesses, particularly those that do not have sufficient cash flow or need to rely on customer credit to maintain operations. Compiling financial information, knowing your market, and understanding what your potential investors are looking for can enable you to make intelligent decisions about your assets and resources.

The income statement, balance sheet, and statement of cash flow are three key financial reports needed for forecasting that can also provide analysts with crucial information about a business's financial health. Here is a closer look at each.

Income Statement

An income statement, also known as a profit and loss statement or P&L, is a financial document that provides an overview of an organization's revenues, expenses, and net income.

Balance Sheet

The balance sheet is a snapshot of the business's assets and liabilities at a certain point in time. Sometimes referred to as the “financial portrait” of a business, the balance sheet provides an overview of how much money the business has, what it owes, and its net worth.

The assets side of the balance sheet includes what the business owns as well as future ownership items. The other side of the sheet includes liabilities and equity, which represent what it owes or what others owe to the business.

A balance sheet that shows hypothetical calculations and future financial projections is also referred to as a “pro forma” balance sheet.

Cash Flow Statement

A cash flow statement monitors the business’s inflows and outflows—both cash and non-cash. Cash flow is the business’s projected earnings before interest, taxes, depreciation, and amortization ( EBITDA ) minus capital investments.

Here's how to compile your financial projections and fit the results into the three above statements.

A financial projections spreadsheet for your business should include these metrics and figures:

  • Sales forecast
  • Balance sheet
  • Operating expenses
  • Payroll expenses (if applicable)
  • Amortization and depreciation
  • Cash flow statement
  • Income statement
  • Cost of goods sold (COGS)
  • Break-even analysis

Here are key steps to account for creating your financial projections.

Projecting Sales

The first step for a financial forecast starts with projecting your business’s sales, which are typically derived from past revenue as well as industry research. These projections allow businesses to understand what their risks are and how much they will need in terms of staffing, resources, and funding.

Sales forecasts also enable businesses to decide on important levels such as product variety, price points, and inventory capacity.

Income Statement Calculations

A projected income statement shows how much you expect in revenue and profit—as well as your estimated expenses and losses—over a specific time in the future. Like a standard income statement, elements on a projection include revenue, COGS, and expenses that you’ll calculate to determine figures such as the business’s gross profit margin and net income.

If you’re developing a hypothetical, or pro forma, income statement, you can use historical data from previous years’ income statements. You can also do a comparative analysis of two different income statement periods to come up with your figures.

Anticipate Fixed Costs

Fixed business costs are expenses that do not change based on the number of products sold. The best way to anticipate fixed business costs is to research your industry and prepare a budget using actual numbers from competitors in the industry. Anticipating fixed costs ensures your business doesn’t overpay for its needs and balances out its variable costs. A few examples of fixed business costs include:

  • Rent or mortgage payments
  • Operating expenses (also called selling, general and administrative expenses or SG&A)
  • Utility bills
  • Insurance premiums

Unfortunately, it might not be possible to predict accurately how much your fixed costs will change in a year due to variables such as inflation, property, and interest rates. It’s best to slightly overestimate fixed costs just in case you need to account for these potential fluctuations.

Find Your Break-Even Point

The break-even point (BEP) is the number at which a business has the same expenses as its revenue. In other words, it occurs when your operations generate enough revenue to cover all of your business’s costs and expenses. The BEP will differ depending on the type of business, market conditions, and other factors.

To find this number, you need to determine two things: your fixed costs and variable costs. Once you have these figures, you can find your BEP using this formula:

Break-even point = fixed expenses ➗ 1 – (variable expenses ➗ sales)

The BEP is an essential consideration for any projection because it is the point at which total revenue from a project equals total cost. This makes it the point of either profit or loss.

Plan for the Unexpected

It is necessary to have the proper financial safeguards in place to prepare for any unanticipated costs. A sudden vehicle repair, a leaky roof, or broken equipment can quickly derail your budget if you aren't prepared. Cash management is a financial management plan that ensures a business has enough cash on hand to maintain operations and meet short-term obligations.

To maintain cash reserves, you can apply for overdraft protection or an overdraft line of credit. Overdraft protection can be set up by a bank or credit card business and provides short-term loans if the account balance falls below zero. On the other hand, a line of credit is an agreement with a lending institution in which they provide you with an unsecured loan at any time until your balance reaches zero again.

How do you make financial projections for startups?

Financial projections for startups can be hard to complete. Historical financial data may not be available. Find someone with financial projections experience to give insight on risks and outcomes.

Consider business forecasting, too, which incorporates assumptions about the exponential growth of your business.

Startups can also benefit from using EBITDA to get a better look at potential cash flow.

What are the benefits associated with forecasting business finances?

Forecasting can be beneficial for businesses in many ways, including:

  • Providing better understanding of your business cash flow
  • Easing the process of planning and budgeting for the future based on income
  • Improving decision-making
  • Providing valuable insight into what's in their future
  • Making decisions on how to best allocate resources for success

How many years should your financial forecast be?

Your financial forecast should either be projected over a specific time period or projected into perpetuity. There are various methods for determining how long a financial forecasting projection should go out, but many businesses use one to five years as a standard timeframe.

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Score. " Financial Projections Template ."

Free Financial Templates for a Business Plan

By Andy Marker | July 29, 2020

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In this article, we’ve rounded up expert-tested financial templates for your business plan, all of which are free to download in Excel, Google Sheets, and PDF formats.

Included on this page, you’ll find the essential financial statement templates, including income statement templates , cash flow statement templates , and balance sheet templates . Plus, we cover the key elements of the financial section of a business plan .

Financial Plan Templates

Download and prepare these financial plan templates to include in your business plan. Use historical data and future projections to produce an overview of the financial health of your organization to support your business plan and gain buy-in from stakeholders

Business Financial Plan Template

Business Financial Plan Template

Use this financial plan template to organize and prepare the financial section of your business plan. This customizable template has room to provide a financial overview, any important assumptions, key financial indicators and ratios, a break-even analysis, and pro forma financial statements to share key financial data with potential investors.

Download Financial Plan Template

Word | PDF | Smartsheet

Financial Plan Projections Template for Startups

Startup Financial Projections Template

This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business.

‌ Download Startup Financial Projections Template

Excel | Smartsheet

Income Statement Templates for Business Plan

Also called profit and loss statements , these income statement templates will empower you to make critical business decisions by providing insight into your company, as well as illustrating the projected profitability associated with business activities. The numbers prepared in your income statement directly influence the cash flow and balance sheet forecasts.

Pro Forma Income Statement/Profit and Loss Sample

pro forma in business plan

Use this pro forma income statement template to project income and expenses over a three-year time period. Pro forma income statements consider historical or market analysis data to calculate the estimated sales, cost of sales, profits, and more.

‌ Download Pro Forma Income Statement Sample - Excel

Small Business Profit and Loss Statement

Small Business Profit and Loss Template

Small businesses can use this simple profit and loss statement template to project income and expenses for a specific time period. Enter expected income, cost of goods sold, and business expenses, and the built-in formulas will automatically calculate the net income.

‌ Download Small Business Profit and Loss Template - Excel

3-Year Income Statement Template

3 Year Income Statement Template

Use this income statement template to calculate and assess the profit and loss generated by your business over three years. This template provides room to enter revenue and expenses associated with operating your business and allows you to track performance over time.

Download 3-Year Income Statement Template

For additional resources, including how to use profit and loss statements, visit “ Download Free Profit and Loss Templates .”

Cash Flow Statement Templates for Business Plan

Use these free cash flow statement templates to convey how efficiently your company manages the inflow and outflow of money. Use a cash flow statement to analyze the availability of liquid assets and your company’s ability to grow and sustain itself long term.

Simple Cash Flow Template

pro forma in business plan

Use this basic cash flow template to compare your business cash flows against different time periods. Enter the beginning balance of cash on hand, and then detail itemized cash receipts, payments, costs of goods sold, and expenses. Once you enter those values, the built-in formulas will calculate total cash payments, net cash change, and the month ending cash position.

Download Simple Cash Flow Template

12-Month Cash Flow Forecast Template

pro forma in business plan

Use this cash flow forecast template, also called a pro forma cash flow template, to track and compare expected and actual cash flow outcomes on a monthly and yearly basis. Enter the cash on hand at the beginning of each month, and then add the cash receipts (from customers, issuance of stock, and other operations). Finally, add the cash paid out (purchases made, wage expenses, and other cash outflow). Once you enter those values, the built-in formulas will calculate your cash position for each month with.

‌ Download 12-Month Cash Flow Forecast

3-Year Cash Flow Statement Template Set

3 Year Cash Flow Statement Template

Use this cash flow statement template set to analyze the amount of cash your company has compared to its expenses and liabilities. This template set contains a tab to create a monthly cash flow statement, a yearly cash flow statement, and a three-year cash flow statement to track cash flow for the operating, investing, and financing activities of your business.

Download 3-Year Cash Flow Statement Template

For additional information on managing your cash flow, including how to create a cash flow forecast, visit “ Free Cash Flow Statement Templates .”

Balance Sheet Templates for a Business Plan

Use these free balance sheet templates to convey the financial position of your business during a specific time period to potential investors and stakeholders.

Small Business Pro Forma Balance Sheet

pro forma in business plan

Small businesses can use this pro forma balance sheet template to project account balances for assets, liabilities, and equity for a designated period. Established businesses can use this template (and its built-in formulas) to calculate key financial ratios, including working capital.

Download Pro Forma Balance Sheet Template

Monthly and Quarterly Balance Sheet Template

pro forma in business plan

Use this balance sheet template to evaluate your company’s financial health on a monthly, quarterly, and annual basis. You can also use this template to project your financial position for a specified time in the future. Once you complete the balance sheet, you can compare and analyze your assets, liabilities, and equity on a quarter-over-quarter or year-over-year basis.

Download Monthly/Quarterly Balance Sheet Template - Excel

Yearly Balance Sheet Template

pro forma in business plan

Use this balance sheet template to compare your company’s short and long-term assets, liabilities, and equity year-over-year. This template also provides calculations for common financial ratios with built-in formulas, so you can use it to evaluate account balances annually.

Download Yearly Balance Sheet Template - Excel

For more downloadable resources for a wide range of organizations, visit “ Free Balance Sheet Templates .”

Sales Forecast Templates for Business Plan

Sales projections are a fundamental part of a business plan, and should support all other components of your plan, including your market analysis, product offerings, and marketing plan . Use these sales forecast templates to estimate future sales, and ensure the numbers align with the sales numbers provided in your income statement.

Basic Sales Forecast Sample Template

Basic Sales Forecast Template

Use this basic forecast template to project the sales of a specific product. Gather historical and industry sales data to generate monthly and yearly estimates of the number of units sold and the price per unit. Then, the pre-built formulas will calculate percentages automatically. You’ll also find details about which months provide the highest sales percentage, and the percentage change in sales month-over-month. 

Download Basic Sales Forecast Sample Template

12-Month Sales Forecast Template for Multiple Products

pro forma in business plan

Use this sales forecast template to project the future sales of a business across multiple products or services over the course of a year. Enter your estimated monthly sales, and the built-in formulas will calculate annual totals. There is also space to record and track year-over-year sales, so you can pinpoint sales trends.

Download 12-Month Sales Forecasting Template for Multiple Products

3-Year Sales Forecast Template for Multiple Products

3 Year Sales Forecast Template

Use this sales forecast template to estimate the monthly and yearly sales for multiple products over a three-year period. Enter the monthly units sold, unit costs, and unit price. Once you enter those values, built-in formulas will automatically calculate revenue, margin per unit, and gross profit. This template also provides bar charts and line graphs to visually display sales and gross profit year over year.

Download 3-Year Sales Forecast Template - Excel

For a wider selection of resources to project your sales, visit “ Free Sales Forecasting Templates .”

Break-Even Analysis Template for Business Plan

A break-even analysis will help you ascertain the point at which a business, product, or service will become profitable. This analysis uses a calculation to pinpoint the number of service or unit sales you need to make to cover costs and make a profit.

Break-Even Analysis Template

Break Even Analysis

Use this break-even analysis template to calculate the number of sales needed to become profitable. Enter the product's selling price at the top of the template, and then add the fixed and variable costs. Once you enter those values, the built-in formulas will calculate the total variable cost, the contribution margin, and break-even units and sales values.

Download Break-Even Analysis Template

For additional resources, visit, “ Free Financial Planning Templates .”

Business Budget Templates for Business Plan

These business budget templates will help you track costs (e.g., fixed and variable) and expenses (e.g., one-time and recurring) associated with starting and running a business. Having a detailed budget enables you to make sound strategic decisions, and should align with the expense values listed on your income statement.

Startup Budget Template

pro forma in business plan

Use this startup budget template to track estimated and actual costs and expenses for various business categories, including administrative, marketing, labor, and other office costs. There is also room to provide funding estimates from investors, banks, and other sources to get a detailed view of the resources you need to start and operate your business.

Download Startup Budget Template

Small Business Budget Template

pro forma in business plan

This business budget template is ideal for small businesses that want to record estimated revenue and expenditures on a monthly and yearly basis. This customizable template comes with a tab to list income, expenses, and a cash flow recording to track cash transactions and balances.

Download Small Business Budget Template

Professional Business Budget Template

pro forma in business plan

Established organizations will appreciate this customizable business budget template, which  contains a separate tab to track projected business expenses, actual business expenses, variances, and an expense analysis. Once you enter projected and actual expenses, the built-in formulas will automatically calculate expense variances and populate the included visual charts. 

‌ Download Professional Business Budget Template

For additional resources to plan and track your business costs and expenses, visit “ Free Business Budget Templates for Any Company .”

Other Financial Templates for Business Plan

In this section, you’ll find additional financial templates that you may want to include as part of your larger business plan.

Startup Funding Requirements Template

Startup Funding Requirements Template

This simple startup funding requirements template is useful for startups and small businesses that require funding to get business off the ground. The numbers generated in this template should align with those in your financial projections, and should detail the allocation of acquired capital to various startup expenses.

Download Startup Funding Requirements Template - Excel

Personnel Plan Template

Personnel Plan Template

Use this customizable personnel plan template to map out the current and future staff needed to get — and keep — the business running. This information belongs in the personnel section of a business plan, and details the job title, amount of pay, and hiring timeline for each position. This template calculates the monthly and yearly expenses associated with each role using built-in formulas. Additionally, you can add an organizational chart to provide a visual overview of the company’s structure. 

Download Personnel Plan Template - Excel

Elements of the Financial Section of a Business Plan

Whether your organization is a startup, a small business, or an enterprise, the financial plan is the cornerstone of any business plan. The financial section should demonstrate the feasibility and profitability of your idea and should support all other aspects of the business plan. 

Below, you’ll find a quick overview of the components of a solid financial plan.

  • Financial Overview: This section provides a brief summary of the financial section, and includes key takeaways of the financial statements. If you prefer, you can also add a brief description of each statement in the respective statement’s section.
  • Key Assumptions: This component details the basis for your financial projections, including tax and interest rates, economic climate, and other critical, underlying factors.
  • Break-Even Analysis: This calculation helps establish the selling price of a product or service, and determines when a product or service should become profitable.
  • Pro Forma Income Statement: Also known as a profit and loss statement, this section details the sales, cost of sales, profitability, and other vital financial information to stakeholders.
  • Pro Forma Cash Flow Statement: This area outlines the projected cash inflows and outflows the business expects to generate from operating, financing, and investing activities during a specific timeframe.
  • Pro Forma Balance Sheet: This document conveys how your business plans to manage assets, including receivables and inventory.
  • Key Financial Indicators and Ratios: In this section, highlight key financial indicators and ratios extracted from financial statements that bankers, analysts, and investors can use to evaluate the financial health and position of your business.

Need help putting together the rest of your business plan? Check out our free simple business plan templates to get started. You can learn how to write a successful simple business plan  here . 

Visit this  free non-profit business plan template roundup  or download a  fill-in-the-blank business plan template  to make things easy. If you are looking for a business plan template by file type, visit our pages dedicated specifically to  Microsoft Excel ,  Microsoft Word , and  Adobe PDF  business plan templates. Read our articles offering  startup business plan templates  or  free 30-60-90-day business plan templates  to find more tailored options.

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How to Use Pro Forma to Make Better Business Decisions

By alex ryzhkov, introduction.

Pro forma is a Latin term that translates to “for the sake of form” or “as a matter of form.” In financial terms, it refers to a document that projects or estimates future revenues and/or expenses for a business. It is a valuable tool for decision-making, enabling companies to plan ahead, develop strategies, and anticipate any future issues or opportunities that may arise in the process. In this blog post, we’ll discuss the role of pro forma in business decisions and how you can use it to make better decisions.

Definition of Pro Forma

Pro forma documents provide an overview of a company’s expected income and expenses in the months ahead. This document can be used as a forecasting tool, helping businesses plan ahead and make decisions accordingly. It is often used in the initial phases of a company, as it helps investors and financial professionals to accurately forecast revenues and expenses. Pro forma documents are also used to help businesses make decisions and assess the viability of a project or investment.

Overview of Pro Forma's Role in Decision Making

Pro forma documents can be used to help businesses make decisions by providing an estimate of future revenues and expenses. This enables companies to predict their cash flow and determine whether or not a particular business decision will be profitable in the long run. For instance, if a company is considering launching a product, a pro forma document can help them estimate the costs of production, as well as forecast the expected return on investment. Additionally, a pro forma document can also help a company estimate their level of risk associated with a particular decision.

In addition to helping companies make better decisions, pro forma documents can also help financial professionals to assess the viability of a business and identify potential areas of risk. For example, if a company is considering restructuring, a pro forma document can help financial professionals to estimate the costs associated with the restructuring and anticipate potential outcomes.

Key Takeaways

  • Pro forma documents are used to project and estimate future revenues and expenses of a company.
  • Pro forma documents can be used to help businesses make better decisions by providing an estimate of future income and expenses.
  • Pro forma documents can also help financial professionals to assess the viability of a business and identify potential areas of risk.

Identifying Financial Goals

When it comes to using pro forma to make better financial decisions, it is imperative to first identify your financial goals. This will give you a clear direction in when determining your business strategies. There are both short and long-term goals that you should outline for yourself when it comes to managing your business finances.

Establish short-term and long-term goals

Short-term goals are the short-term targets for your business. These goals should include objectives that you expect to achieve within a time frame of one to three years.Examples can include increasing profits by a certain margin in 12 months, reducing costs by a certain amount within 9 months, or expanding the customer base in two years.

Long-term goals are longer-term targets for your business. These goals should involve achieving objectives over a period of more than three years.Examples can include opening a second facility in five years, expanding into a new geographic territory in eight years, or doubling profits within ten years.

Having a realistic assessment of the current financial situation

It is important to understand where your business stands financially in order to make informed decisions. That is why it is crucial to have a realistic assessment of your current financial situation prior to making any decisions. This includes understanding the key financial variables of your business, such as sales and expenses, current assets and liabilities, and cash flows. By understanding your current financial situation, you will be able to identify areas for improvement and make changes where necessary.

It is also important to understand what your short and long-term objectives are for your business. Once you have identified these objectives, you can then use pro forma to make better financial decisions. By analyzing the data from your financial statements, you will be able to make informed decisions related to your financial objectives.

Budget Planning and Forecasting

Pro Forma is a financial forecasting process that allows a business to plan ahead, prepare budgets, and make decisions based on similar past scenarios. Pro forma helps organizations allocate their resources towards achieving their long-term goals. By outlining the different operational and marketing expenditures, businesses are able to better prepare for upcoming financial quarters.

Planning for Operational Expenses for Upcoming Periods

When using Pro Forma to plan for operational expenses for upcoming periods, businesses can get an idea of what needs to be spent on different activities. Pro Forma budget planning can help businesses plan marketing efforts, salary costs, research and development costs, and any overhead expenses. By having an understanding of the costs associated with activities, businesses can better estimate their expected outcomes and understand the financial impact of their decisions before taking action.

Forecasting Marketing Outcomes

In addition to planning for operational expenses, Pro Forma can also be used to forecast the outcomes of marketing activities. Through forecasting, businesses can better understand the potential return on investment and expected cost savings of campaigns. Businesses can use Pro Forma forecasting to plan for and monitor their marketing budget, helping them better understand the return of their marketing activities.

  • By planning for operational and marketing expenses, businesses can better allocate their resources and understand the financial impact of their decisions.
  • Pro Forma forecasting can help businesses understand the potential return on investment and expected cost savings of their marketing activities.

Enhancing Productivity

Using pro forma to analyze potential investments that increase productivity can be an effective way to make informed business decisions. Pro forma offers a visual representation of how investments will affect the company’s bottom line. By exploring how expenses, income, and other financials will change as a result of the investment, pro forma enables business owners to make informed decisions and determine the best strategies.

Using Pro Forma to Analyze Potential Investments

Pro forma can be used to analyze investments in various sources, such as technology, staff training, and marketing. With pro forma, business owners can see what the potential impact of each potential investment will be in terms of top line data and bottom line results. This can help business owners evaluate which investments will provide the greatest benefit to the business overall.

For example, if a business is considering investing in new technology, the pro forma can help the business determine how much the investment will cost, how much revenue it will generate, and how much the overall profit will be. Pro forma also allows business owners to compare different investments and see which one will be the most cost-effective for the company.

Analyzing the Return-on-Investment

Using pro forma to analyze the return-on-investment (ROI) is another way to make better business decisions. When evaluating the potential of an investment, business owners can use the pro forma to calculate the amount of time and resources it will take to earn back the initial investment. This can help business owners compare investments and determine which ones are most likely to yield the greatest return.

Pro forma can also be used to analyze the potential losses if the investment does not pan out. By calculating the costs associated with the investment, business owners can ensure that the risk is manageable and that the potential for profit justifies the costs.

Making Strategic Decisions

Making strategic decisions is essential for a business’s success as this allows leaders to review how the company is performing and make changes as needed. Pro forma can provide useful insights that can help make more informed decisions. This section will discuss how to use pro forma to identify areas of the business to reduce costs and areas of the business that need improvement for strategic decision-making.

Identifying Areas of the Business to Reduce Costs

When evaluating a company’s financial performance, pro forma can show where there is potential for cost reduction. A careful review of the pro forma statements can lead to the identification of areas of the business that are excessively expensive, such as raw materials costs or labor costs, or areas of opportunity for cost savings, such as renegotiating supplier contracts or reducing overhead. Taking note of these opportunities and working to reduce the associated costs can lead to the creation of a leaner, more profitable business.

Using the Data Provided to Identify Areas of the Business that Need Improvement

Pro forma can also be used to identify areas of the business that need improvement. Excessive inventory costs, declining sales, or an increase in employee turnover rate can all be indicators that certain areas of the business need attention. By focusing on the right data points and looking for trends in the pro forma statements, it can be easier to identify the areas that need improvement so that the appropriate steps can be taken to ensure the company is thriving and successful.

Using pro forma to make more informed business decisions can be a powerful tool in helping to identify areas of the business to reduce costs and opportunities for improvement. Analyzing the data provided can help provide leaders with a better understanding of the company’s performance and determine the most profitable path for future growth.

Measuring Performance

One of the most important aspects of running a successful business lies in the ability to measure performance throughout the organization. Pro forma analysis allows business owners to take a more proactive role in actively tracking and monitoring the results of their decisions. By measuring performance, owners can more accurately assess the effectiveness of any changes implemented and make adjustments as needed in order to improve the business.

Tracking Key Performance Indicators (KPIs)

Using a pro forma analysis to track key performance indicators (KPIs) is essential for making effective decisions and staying on top of changing market trends. KPIs provide insight into the performance of the company and can be tracked against historical results. These indicators can range from net profits, customer satisfaction, employee performance, operating expenses, and a variety of other factors. Tracking KPIs allows for a more direct line of sight into how the business is performing and can quickly show any potential pitfalls or areas that need improvement.

Analyzing KPIs to Identify Upcoming Trends

Once the KPIs have been tracked, the next step of pro forma analysis is to analyze the data to uncover any patterns that suggest upcoming trends. This analysis allows business owners to make more informed decisions that consider future market conditions and customer demands. In addition, these trends provide insight into the efficacy of any new strategies or operations that have been implemented and can be adjusted accordingly if necessary.

By tracking and analyzing KPIs, pro forma analysis provides a powerful tool for understanding the performance of the business. This helps business owners stay ahead of the curve and make decisions that ensure the growth, development, and success of the company.

Pro forma is a useful tool for making better business decisions, but it is not the only factor to consider. Ultimately, it is important to understand the implications of each pro forma statement, account cautiously for variables, and review the entirety of the financial outline.

To recap, pro forma financial statements allow us to build a fuller picture of the business and its financial activities, which can be used to make more informed decisions. By comparing different scenarios and analyzing the implications in greater detail, they help to provide a deeper understanding of the future of the business. Additionally, by accounting for variable expenses, taxes, and other details, it is possible to develop accurate predictions for the future.

Overall, using pro forma will help to make better business decisions by enabling accurate forecasting and allowing for the comparison of different potential paths. By taking the necessary precautions to ensure the validity of the statements and a comprehensive analysis of the implications of the different scenarios, it is possible to create a detailed financial model that can provide valuable insights into the business’s future operations.

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Delivering Copilot for everyone

Feb 7, 2024 | Yusuf Mehdi - Executive Vice President, Consumer Chief Marketing Officer

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Three screenshots of Microsoft Copilot

As we approach Super Bowl weekend, we’re thrilled to be a part of the festivities for the first time in four years. This year, we’re proud to celebrate the transformative power of AI and Microsoft Copilot, showcasing peoples’ “watch me” moments with Copilot enabling people to do things previously unattainable. With a simple sentence or two, you will see a budding entrepreneur turn a fledgling idea for a new product into an actionable business plan, a filmmaker’s concept into a rich set of storyboards, and a fantasy football player’s team come to life with a mascot image they can edit inline.

Coincident with the launch of our Super Bowl ad , we are also launching a significant new update to our Microsoft Copilot experience on copilot.microsoft.com and our Copilot app on iOS and Android app stores.  Today when you visit Copilot, you will see a more streamlined look and feel designed to help you bring your ideas to life and more easily gain understanding about the world. We have introduced a cleaner, sleeker look and feel for answers and a fun new carousel of suggested prompts to showcase the power of Copilot.

Today marks exactly one year since our entry into AI-powered experiences for people with Bing Chat. In that year we have learned so many new things and seen the use of our Copilot experiences explode with over 5 billion chats and 5 billion images created to date which have led to sustained growth in Edge and Bing share. Now with Copilot as our singular experience for people looking to get more out of AI creation, we are today introducing further image creation capabilities.

With Designer in Copilot, you can go beyond just creating images to now customize your generated images with inline editing right inside Copilot 1 , keeping you in the flow of your chat. Whether you want to highlight an object to make it pop with enhanced color, blur the background of your image to make your subject shine, or even reimagine your image with a different effect like pixel art, 2 Copilot has you covered, all for free.  If you’re a Copilot Pro subscriber, in addition to the above, you can also now easily resize and regenerate images between square and landscape without leaving chat. Lastly, we will soon roll out our new Designer GPT inside Copilot, which offers an immersive, dedicated canvas inside of Copilot where you can visualize your ideas.

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Copilot is free to use and works on Microsoft Edge, Chrome, Firefox and Safari. Or download the Copilot mobile app on iOS or Android .

AI is the defining technology of our time. Microsoft’s advancements in AI align with our company mission to empower every person and organization on the planet to achieve more. With Copilot, we’re democratizing our breakthroughs in AI to help make the promise of AI real for everyone.

1 Available in English in the United States, United Kingdom, Australia, India and New Zealand.

2 15 daily boosts included in Copilot, 100 daily boosts with a Copilot Pro subscription to be used for creative needs, faster image generation, and more detailed images.

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Tax Time Guide 2024: What to know before completing a tax return

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IR-2024-45, Feb. 21, 2024

WASHINGTON — During the busiest time of the tax filing season, the Internal Revenue Service kicked off its 2024 Tax Time Guide series to help remind taxpayers of key items they’ll need to file a 2023 tax return.

As part of its four-part, weekly Tax Time Guide series, the IRS continues to provide new and updated resources to help taxpayers file an accurate tax return. Taxpayers can count on IRS.gov for updated resources and tools along with a special free help page available around the clock. Taxpayers are also encouraged to read Publication 17, Your Federal Income Tax (For Individuals) for additional guidance.

Essentials to filing an accurate tax return

The deadline this tax season for filing Form 1040, U.S. Individual Income Tax Return , or 1040-SR, U.S. Tax Return for Seniors , is April 15, 2024. However, those who live in Maine or Massachusetts will have until April 17, 2024, to file due to official holidays observed in those states.

Taxpayers are advised to wait until they receive all their proper tax documents before filing their tax returns. Filing without all the necessary documents could lead to mistakes and potential delays.

It’s important for taxpayers to carefully review their documents for any inaccuracies or missing information. If any issues are found, taxpayers should contact the payer immediately to request a correction or confirm that the payer has their current mailing or email address on file.

Creating an IRS Online Account can provide taxpayers with secure access to information about their federal tax account, including payment history, tax records and other important information.

Having organized tax records can make the process of preparing a complete and accurate tax return easier and may also help taxpayers identify any overlooked deductions or credits .

Taxpayers who have an Individual Taxpayer Identification Number or ITIN may need to renew it if it has expired and is required for a U.S. federal tax return. If an expiring or expired ITIN is not renewed, the IRS can still accept the tax return, but it may result in processing delays or delays in credits owed.

Changes to credits and deductions for tax year 2023

Standard deduction amount increased. For 2023, the standard deduction amount has been increased for all filers. The amounts are:

  • Single or married filing separately — $13,850.
  • Head of household — $20,800.
  • Married filing jointly or qualifying surviving spouse — $27,700.

Additional child tax credit amount increased. The maximum additional child tax credit amount has increased to $1,600 for each qualifying child.

Child tax credit enhancements. Many changes to the Child tax credit (CTC) that had been implemented by the American Rescue Plan Act of 2021 have expired.

However, the IRS continues to closely monitor legislation being considered by Congress affecting the Child Tax Credit. The IRS reminds taxpayers eligible for the Child Tax Credit that they should not wait to file their 2023 tax return this filing season. If Congress changes the CTC guidelines, the IRS will automatically make adjustments for those who have already filed so no additional action will be needed by those eligible taxpayers.

Under current law, for tax year 2023, the following currently apply:

  • The enhanced credit allowed for qualifying children under age 6 and children under age 18 has expired. For 2023, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where AGI income exceeds $200,000 ($400,000 in the case of a joint return). The amount of the CTC that can be claimed as a refundable credit is limited as it was in 2020 except that the maximum ACTC amount for each qualifying child increased to $1,500.
  • The increased age allowance for a qualifying child has expired. A child must be under age 17 at the end of 2023 to be a qualifying child.

Changes to the Earned Income Tax Credit (EITC). The enhancements for taxpayers without a qualifying child implemented by the American Rescue Plan Act of 2021 will not apply for tax year 2023. To claim the EITC without a qualifying child in 2023, taxpayers must be at least age 25 but under age 65 at the end of 2023. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2023.

Taxpayers may find more information on Child tax credits in the Instructions for Schedule 8812 (Form 1040) .

New Clean Vehicle Credit. The credit for new qualified plug-in electric drive motor vehicles has changed. This credit is now known as the Clean Vehicle Credit. The maximum amount of the credit and some of the requirements to claim the credit have changed. The credit is reported on Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit , and on Form 1040, Schedule 3.

More information on these and other credit and deduction changes for tax year 2023 may be found in the Publication 17, Your Federal Income Tax (For Individuals) , taxpayer guide.

1099-K reporting requirements have not changed for tax year 2023

Following feedback from taxpayers, tax professionals and payment processors, and to reduce taxpayer confusion, the IRS recently released Notice 2023-74 announcing a delay of the new $600 reporting threshold for tax year 2023 on Form 1099-K, Payment Card and Third-Party Network Transactions . The previous reporting thresholds will remain in place for 2023.

The IRS has published a fact sheet with further information to assist taxpayers concerning changes to 1099-K reporting requirements for tax year 2023.

Form 1099-K reporting requirements

Taxpayers who take direct payment by credit, debit or gift cards for selling goods or providing services by customers or clients should get a Form 1099-K from their payment processor or payment settlement entity no matter how many payments they got or how much they were for.

If they used a payment app or online marketplace and received over $20,000 from over 200 transactions,

the payment app or online marketplace is required to send a Form 1099-K. However, they can send a Form 1099-K with lower amounts. Whether or not the taxpayer receives a Form 1099-K, they must still report any income on their tax return.

What’s taxable? It’s the profit from these activities that’s taxable income. The Form 1099-K shows the gross or total amount of payments received. Taxpayers can use it and other records to figure out the actual taxes they owe on any profits. Remember that all income, no matter the amount, is taxable unless the tax law says it isn’t – even if taxpayers don’t get a Form 1099-K.

What’s not taxable? Taxpayers shouldn’t receive a Form 1099-K for personal payments, including money received as a gift and for repayment of shared expenses. That money isn’t taxable. To prevent getting an inaccurate Form 1099-K, note those payments as “personal,” if possible.

Good recordkeeping is key. Be sure to keep good records because it helps when it’s time to file a tax return. It’s a good idea to keep business and personal transactions separate to make it easier to figure out what a taxpayer owes.

For details on what to do if a taxpayer gets a Form 1099-K in error or the information on their form is incorrect, visit IRS.gov/1099k  or find frequently asked questions at Form 1099-K FAQs .

Direct File pilot program provides a new option this year for some

The IRS launched the Direct File pilot program during the 2024 tax season. The pilot will give eligible taxpayers an option to prepare and electronically file their 2023 tax returns, for free, directly with the IRS.

The Direct File pilot program will be offered to eligible taxpayers in 12 pilot states who have relatively simple tax returns reporting only certain types of income and claiming limited credits and deductions. The 12 states currently participating in the Direct File pilot program are Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming. Taxpayers can check their eligibility at directfile.irs.gov .

The Direct File pilot is currently in the internal testing phase and will be more widely available in mid-March. Taxpayers can get the latest news about the pilot at Direct File pilot news and sign up to be notified when Direct File is open to new users.

Finally, for comprehensive information on all these and other changes for tax year 2023, taxpayers and tax professionals are encouraged to read the Publication 17, Your Federal Income Tax (For Individuals) , taxpayer guide, as well as visit other topics of taxpayer interest on IRS.gov.

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  1. Pro Forma: What It Means and How to Create Pro Forma ...

    Pro forma, Latin for "as a matter of form" or "for the sake of form", is a method of calculating financial results using certain projections or presumptions. Pro forma financials may not be...

  2. Pro Forma Business Plan Template & Financial Statements

    A pro forma business plan is simply another name for a business plan. The term "pro forma" specifically means "based on financial assumptions or projections" which all business plans are. That is, all business plans present a vision of the company's future using assumptions and projections.

  3. What Are Pro Forma Financial Statements?

    Since the term "pro forma" refers to projections or forecasts, it can apply to a variety of financial statements, including: Income statements Balance sheets Cash flow statements Whether you're trying to interpret pro forma financial statements or prepare them, these projections can be useful in guiding important business decisions.

  4. Pro Forma Financial Statements (with Templates and Examples)

    April 21, 2022 This article is Tax Professional approved Pro forma definition According to Merriam-Webster, "pro forma" means: Made or carried out in a perfunctory manner or as a formality Based on financial assumptions or projections What's Bench? Online bookkeeping and tax filing powered by real humans. Learn more

  5. How a Pro Forma Statement Can Help Your Small Business

    Pro forma is a Latin term that means "as a matter of form" or "for the sake of form." In business and accounting, it describes financial statements that are based on assumptions or estimates rather than actual historical data. Maybe you're considering taking out a small business loan or merging with a larger company.

  6. Pro Forma Financial Statements |Smartsheet

    "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. Pro forma data estimates are built in to show the company's profits if certain, one-time items are taken out.

  7. A Small Business Guide to Pro Forma Financial Statements

    In accounting, pro forma refers to financial reports based on assumptions and hypothetical situations, not reality. Businesses use pro forma financial documents internally to aid in...

  8. Pro Forma

    Pro forma documents, in any form, are essentially like letters of intent, expressing what an invoice or transaction is anticipated to look like after completion. The documents are often used to express interest in business transactions or reveal the intended purpose and outcome of the transaction.

  9. Pro Forma Financial Statements Explained

    Pro forma financial statements are used in a business plan to present the best-case, expected, and worst-case scenarios for a proposed transaction. With pro forma statements, businesses can better make assumptions on what decisions are best for the company, such as labor increases, production increases, or even expansion.

  10. 18.3 Pro Forma Financials

    Review the video Business Plan and Pro-Forma Financial Statements to learn about the basics of pro forma financial statements and why they are helpful. Length of a Forecast. Forecasts can generally be for any length of time. The length generally depends on the user's needs. A one-year forecast, broken down by month, is quite typical.

  11. Ultimate pro forma template for Excel

    This template allows for the following: Create pro forma income statements, pro forma balance sheets, and pro forma cash flow statements. Easily edit each model; easily change the data to make new predictions. Then, make pro forma adjustments based on new information. Generate financial ratios.

  12. Telling the Future: The Power of Pro Forma • Financially Simple

    Using the principles of the pro forma calculation method, you can take a glimpse into the future and create or adjust plans to reach your business goals. Look, life is hard but it's still so good. Tracking the future of your business can be frustrating but it doesn't have to be. With the power of pro forma, we can at least make forecasting ...

  13. Pro Forma Financial Statements: What to Know (Plus Examples)

    Businesses can develop pro forma income statements, balance sheets, revenue projections, estimates of costs and expenses and expectations of cash flow, such as the result of a merger or the introduction of a new product. Adjustments for Nonrecurring Items Suppose a company has recently gone through a substantial restructuring program.

  14. How To Prepare Pro Forma Financial Statements For A Business Plan

    Pro Forma Revenue If you are creating a pro forma financial statement for a start-up, then you will have to use current industry data and your own business plans to project how much revenue you will make in your first year.

  15. How to Create Pro Forma Financial Statements

    4 Main Types of Pro Forma Statements. There are four main types of pro forma statements that you can use to manage your cash flows and the financial health of your business. Pro forma balance sheets: This is similar to a traditional balance sheet as it shows the accounts receivable, your cash flow statements, and other pertinent financial ...

  16. How to Create a Pro Forma Balance Sheet

    Pro forma balance sheets are used to project how the business will be managing its assets in the future. A pro forma balance sheet, along with a and a are the basic financial projections for a business. Hence they should be an integral part of any business plan.

  17. How to Create a Pro Forma Cash Flow

    Creating Pro Forma Cash Flows. This allows you to determine in advance whether you will need to cover your cash shortage by borrowing money, selling more stock in the business, or taking other steps, such as cutting expenses, to improve your cash position. To create a pro forma cash flow, you need to know your current cash position.

  18. Pro Forma Template: What Are They? How To Use Them

    A pro forma template, also known as a pro forma financial statement, is a document used to project future financial performance based on hypothetical scenarios. In the context of accounting, pro forma templates will help you make decisions based on hypothetical scenarios as well. They can also help you formulate a business plan, obtain investor ...

  19. Pro Forma Income Statement

    Pro Forma Income Statement Explained. A pro forma income statement in business plan is the statement prepared by the business entity to prepare the projections of income and expenses, which they expect to have in the future by following certain assumptions such as competition level in the market, size of the market, and growth rate, etc.

  20. Pro Forma: Understanding Its Application in Business Financial Analysis

    "Pro forma" is a Latin term that means "for the sake of form" and, in finance, it refers to a method of calculating financial results using certain projections or modifications.

  21. How To Create Financial Projections for Your Business

    Some of the key components to include in a financial projection include a sales projection, break-even analysis, and pro forma balance sheet and income statement. A financial projection can not only attract investors, but helps business owners anticipate fixed costs, find a break-even point, and prepare for the unexpected.

  22. Business Plan Financial Templates

    This financial plan projections template comes as a set of pro forma templates designed to help startups. The template set includes a 12-month profit and loss statement, a balance sheet, and a cash flow statement for you to detail the current and projected financial position of a business. Download Startup Financial Projections Template.

  23. How to Use Pro Forma to Make Better Business Decisions

    Pro forma is a Latin term that translates to "for the sake of form" or "as a matter of form.". In financial terms, it refers to a document that projects or estimates future revenues and/or expenses for a business. It is a valuable tool for decision-making, enabling companies to plan ahead, develop strategies, and anticipate any future ...

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    With a simple sentence or two, you will see a budding entrepreneur turn a fledgling idea for a new product into an actionable business plan, a filmmaker's concept into a rich set of storyboards, and a fantasy football player's team come to life with a mascot image they can edit inline.

  25. Dolphins Get Clarity on Cost of Business

    There are four different levels of price for fifth-year options, starting with players selected to at least two Pro Bowls in their first three seasons, players with one Pro Bowl, players with no ...

  26. Lindsay Lucas on Instagram: "Here's what I would do... If I was

    139 likes, 54 comments - thelindsaylucas on February 15, 2024: "Here's what I would do... If I was starting a wedding venue in 2024 with little or no money - ..."

  27. Tax Time Guide 2024: What to know before completing a tax return

    The enhancements for taxpayers without a qualifying child implemented by the American Rescue Plan Act of 2021 will not apply for tax year 2023. To claim the EITC without a qualifying child in 2023, taxpayers must be at least age 25 but under age 65 at the end of 2023. ... It's a good idea to keep business and personal transactions separate to ...

  28. Truist to focus on banking with $15.5 bln insurance brokerage business

    Truist Financial agreed to sell the remaining stake in its insurance brokerage business to an investor group on Tuesday, in a deal valued at $15.5 billion, as it looks to strengthen its core ...

  29. Trump's Cash Crunch

    Last week, when a civil court judge in New York ruled against Donald J. Trump, he imposed a set of penalties so severe that they could temporarily sever the former president from his real-estate ...