Pro forma financial statement example. For example a corporation might want to see the effects of three different financing options. 105 a pro forma financial statement is defined as a financial statement prepared on the basis of some assumed events and transactions that have not yet occurred. Financial pg 1 1 planning and forecasting version 10 1.
A financial plan may also include a cash flow budget which is a companys monthly forecast of. When preparing to raise funds whether at an angel level or a more advanced level series a or some subsequent funding stage startups and other early stage companies must have an understanding of their financial pro forma in order to be successful financial pro forma are projections or other financial models of future results. John rollins yale university press the aaup business handbook part two.
A pro forma financial statement is one based on certain assumptions and projections. The pro forma accounting is a statement of the companys financial activities while excluding unusual and nonrecurring transactions when stating how much money the company actually madeexpenses often excluded from pro forma results include company restructuring costs a decline in the value of the companys investments or other accounting charges such as adjusting the current. Accounting budgeting and financial management budgeting and financial accounting.
In ralph estess dictionary of accounting mit cambridge 1981 p. A financial plan contains short and long term financial projections for a small or large business. Financial planning and forecasting 11 pro forma financial statements financial statements projections and forecasting are very common in corporate financial analysis.
Balance sheet all inputs are marked with the symbol. What are pro forma financial statements. If neither the monthly mortgage payment or interest rate is explicitly stated this is typically not the case and this information is usually provided in a pro forma we can use a mortgage calculator to figure out the exact terms.
From the pro forma we know that the downpayment was 25 of the purchase price.