Pro Forma Statement
Pro forma financial statements are financial reports issued by an entity using assumptions or hypothetical conditions about events that may have occurred in the past or which may occur in the future.
Pro forma statement. These statements are used to present a view of corporate results to outsiders perhaps as part of an investment or lending proposal. Pro forma statements vs. But budgets and pro forma statements are two distinct financial tools. Projected or estimated financial statement that attempts to present a reasonably accurate idea of what a firm s financial situation would be if the present trends continue or certain assumptions hold true.
Pro forma statements are used routinely in preparing what if scenarios formulating business plans estimating cash. And both help you plan how you ll use your money. 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.
Pro forma income statement also known as pro forma profit and loss means how the adjusted income statement will look like when certain assumptions like non recurring items restructuring costs etc were excluded or if a loss making unit is discontinued.