Pro Forma Income Statement Example

Here we discuss the top 4 types along with practical examples and also key issues with using such statements. Pro forma income statement 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 growth rate etc. Pro forma statements provide organizations with an estimation of future financial performance.

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But for our purposes we will be using the first definition.

Pro forma income statement example. As a reference from the initial income statement some amounts are taken to predict the future outcome. Pro forma income statement. For example a company might present a pro forma income statement of what its income may have looked like if it did not include the money losing division it sold off. Pro forma cash flow statement.

The word pro forma is the latin word which means as a matter of. A pro forma is any kind of document which is given as a formality or courtesy and contains information about a particular event. When they re done well these statements can be used to make predictions about how a company will perform in the future. According to your pro forma annual income statement it will be 44 000 next year.

For example when an existing organization plans for a merger or acquisition it has to present it to the shareholders. The income statement is probably the most commonly pro forma ed financial statement because management investors and creditors all want to see what happens to profits if certain business deals take place in the future. It is usually made for accounting purposes as a record of a company s various financial transactions. This has been a guide to what are pro forma financial statements.

Your income this year is 37 000. Pro forma income statement template microsoft. You may learn more about financial statements from the following articles pro forma income statement. This occurs because the proforma income statement is designed to display what the property s financial data such as revenue and expenses become during any specific year over the course of say the next ten years.

The proforma income statement is a proven method real estate investors use to evaluate a rental income property s future financial performance over time. These statements are the complete set of financial reports issued by an entity reinforce assumptions or speculative conditions about events that may have happened in the past or which may happen later on in the future. Pro forma is a fancy word for future or projected. A pro forma has to be very detailed and takes a lot of time to be written.

Thus management will create an estimated income statement based on certain assumptions. The pro forma income statement generates the projected income when a specific project is undertaken. Pro forma income statement excel templates can be used to portray a business s finances accurately and succinctly. 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.